Child Care Tax Credit FAQs
A parent or legal guardian qualifies for the Child Care Refundable Tax Credit if all the following are met:
- The parent or legal guardian has a child who is five years old or younger as of December 31 of the calendar year (i.e., under age 6) for which the tax credit is being requested and the child will be claimed by the parent or legal guardian as a dependent for federal income tax purposes;
- The parent’s or legal guardian’s total household income is equal to or less than $150,000; and
- One of the following applies:
- The child is enrolled in a childcare program licensed through the Child Care Licensing Act;
- The child received care from an approved license-exempt provider enrolled in the childcare subsidy program under Neb. Rev. Stat. § 68-1202 and 68-1206; or
- The parent or legal guardian’s total household income is less than or equal to 100% of the federal poverty level.
If the foster parent claims the foster child for federal income tax purposes, they may qualify for the tax credit.
The foster child and foster parent must meet all other qualifications for the tax credit with regard to the child's age, the foster parent's total household income, and the enrollment of the child in a qualified child care program if applicable.
The dependent child must be age 5 years or younger as of December 31 of the calendar year (i.e., under age 6) for which the tax credit is being requested.
No. If you do not have the adjusted gross income from your federal return, you may use the Child Care Refundable Tax Credit Total Household Income Calculation worksheet to estimate your total household income for the Child Care Refundable Tax Credit Application, Form 7203.
The applicant’s total household income must be equal to or less than $150,000 for the tax year for which the credit is being requested.
The amount of the reserved credit is limited to the amount indicated in the Estimated Credit Authorization section of your approved Form 7203 and may be reduced or disallowed based on the actual amounts and information reported on your Nebraska individual income tax return. Do not submit an additional Form 7203 to adjust the estimated total household income reported on your original Form 7203 application.
If approved, the reserved credit will equal:
- $2,000 per child, if the total household income is no more than $75,000; or
- $1,000 per child, if the total household income is more than $75,000 but no more than $150,000.
If the total household income is more than $150,000, the parent or legal guardian is not eligible for the child care refundable tax credit.
DOR may approve Child Care Refundable Tax Credits each year until the total amount of approved credits for the year equals $15 million. Applications that are received on the date that the total annual statutory limit is reached will be approved for a prorated tax credit based on the total amount remaining and the total amount of credit requests received that day.
The amount of the reserved credit is limited to the amount indicated in the Estimated Credit Authorization section of the approved Form 7203 and may be reduced or disallowed based on the actual amounts and information reported on the Nebraska individual income tax return.
Yes.
No. Parents and legal guardians who qualify for the tax credit must submit the Child Care Refundable Tax Credit Application, Form 7203, to the Nebraska Department of Revenue (DOR) and receive confirmation of approval prior to claiming the tax credit on their Nebraska individual income tax return.
The Child Care Refundable Tax Credit Application, Form 7203, can be filed electronically using DOR’s Electronic Document and Submission Hub (eDASH).
Yes. If a tax preparer submits the Form 7203 in eDASH on behalf of the applicant, the preparer must retain either a Form 7203 or a Power of Attorney, Form 33, signed by the taxpayer in their records. A digital signature is acceptable on the Form 7203. Per Revenue Ruling 99-20-01, a digital signature is not acceptable on the Form 33. The signed forms retained for the preparer’s records do not need to be submitted to DOR unless requested.
No. The Form 7203 allows for up to 10 dependent children per application submission. If you claim more than 10 qualifying, dependent children, you will need to submit an additional Form 7203. Note: The parent or legal guardian must claim the dependent child on their federal income tax return in order to claim the child for this tax credit.
The applications are used to reserve the tax credits for the individual to claim on their Nebraska individual income tax return. If the tax credit is approved, the applicant will receive confirmation from the Nebraska Department of Revenue (DOR) that their Child Care Refundable Tax Credit Application, Form 7203, has been approved and certified.
To claim the credit, you must complete the applicable line on your Nebraska individual income tax return. You will need the Certification Number and Reserved Credit Amount from the Estimated Credit Authorization section of your approved Form 7203 when claiming the credit on your Nebraska individual income tax return.
Yes. The applications will be processed in the order received. Applications can be approved under the Act until the total amount of credits approved for the tax year reaches $15 million.
The total annual statutory limit is $15 million. DOR must consider applications in the order received and may approve tax credits for the tax year until the total amount of credits approved reaches the annual statutory limit.
Applications that are received on the date the total annual statutory limit is reached will be approved for a prorated tax credit based on the total amount remaining and the total amount of credit requests received that day.
Applications received from parents or legal guardians who are eligible for the tax credit and apply after the statutory limit is reached will be held. Parents or legal guardians will receive an email notification from the eDASH system indicating that their credit request has not been approved due to the total annual statutory limit being reached. DOR will contact these taxpayers if funds become available.
No, only the parent or legal guardian that is claiming the child as a dependent on their federal income tax return can claim the Nebraska tax credit.
Once the credit has been reserved, the taxpayer must file their income tax return within the statute of limitations, generally three years from the due date of the return, in order to claim the credit.
Yes. The program qualifies if the dependent child was enrolled in a preschool, nursery or school-age child care program that is not required to be licensed under the Child Care Licensing Act because the program is operated or contracted by a public school district and subject to the rules and regulations of the Nebraska Department of Education pursuant to Neb. Rev. Stat. § § 71-1910 and 71-1916(4). You will enter the Child Care Program/Provider Name and select NO in the license-exempt box. In the Child Care License Number field, enter “HS” followed by your Public High School District Code. For example, enter “HS5555001” for the Lincoln high school district in Lancaster County.
Yes, an SSN or ITIN are both acceptable for parents or legal guardians to use when applying for the tax credit.
Yes.
