HOUSE BILL 344
49th legislature - STATE OF NEW MEXICO - first session, 2009
INTRODUCED BY
Rhonda S. King
FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE
AN ACT
RELATING TO TAXATION; EXPANDING AND MODIFYING THE CREDIT FOR EXPENSES FOR DEPENDENT CHILD DAY CARE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 7-2-18.1 NMSA 1978 (being Laws 1981, Chapter 170, Section 1, as amended) is amended to read:
"7-2-18.1. CREDIT FOR EXPENSES FOR DEPENDENT CHILD DAY CARE NECESSARY TO ENABLE GAINFUL EMPLOYMENT TO PREVENT INDIGENCY.--
A. As used in this section:
[(1) "caregiver" means a corporation or an individual eighteen years of age or over who receives compensation from the resident for providing direct care, supervision and guidance to a qualifying dependent of the resident for less than twenty-four hours daily and includes related individuals of the resident but does not include a dependent of the resident;
(2) "cost of maintaining a household" means the expenses incurred for the mutual benefit of the occupants thereof by reason of its operation as the principal place of abode of such occupants, including property taxes, mortgage interest, rent, utility charges, upkeep and repairs, property insurance and food consumed on the premises. "Cost of maintaining a household" shall not include expenses otherwise incurred, including cost of clothing, education, medical treatment, vacations, life insurance, transportation and mortgages;]
(1) "annual minimum wage" means the product, rounded up to the nearest one thousand dollars ($1,000), of the New Mexico hourly minimum wage in effect on the last day of the taxable year multiplied by two thousand eighty hours;
(2) "child day care expenses" means "employment related expenses" as defined in Section 21(b)(2) of the Internal Revenue Code that are incurred in New Mexico by the taxpayer for the care of a qualifying dependent, subject to the limitation in Section 21(d) of the Internal Revenue Code, and reduced by the aggregate amount excluded from gross income under Section 129 of the Internal Revenue Code; but "child day care expenses" does not include any amounts paid to related individuals as described in Section 21(e)(6) of the Internal Revenue Code;
(3) "dependent" means "dependent" as defined by Section 152 of the Internal Revenue Code; [as that section may be amended or renumbered, but also includes any minor child or stepchild of the resident who would be a dependent for federal income tax purposes if the public assistance contributing to the support of the child or stepchild was considered to have been contributed by the resident;
(4) "disabled person" means a person who has a medically determinable physical or mental impairment, as certified by a licensed physician, that renders such person unable to engage in gainful employment;
(5)] (4) "gainfully employed" means working or looking for work for remuneration for others, either full time or part time, or self-employment in a business or partnership; "gainfully employed" includes a spouse who is a student or is incapable of caring for himself as described in Section 21(d)(2) of the Internal Revenue Code; and
[(6)] (5) "qualifying dependent" means a dependent [under the age of fifteen at the end of the taxable year who receives the services of a caregiver] of the taxpayer as defined in Section 152(a)(1) of the Internal Revenue Code who has not attained the age of fifteen on the last day of the taxpayer's taxable year, but "qualifying dependent" does not include any individual who would not be considered a dependent under the special dependency test of Section 21(e)(5) of the Internal Revenue Code.
B. Any taxpayer who is a full-year or first year resident of New Mexico who files an individual New Mexico income tax return and who is not a dependent of another taxpayer may claim a credit for child day care expenses incurred [and paid to a caregiver in New Mexico] during the taxable year by [such resident] the taxpayer if the [residents] taxpayer:
[(1) singly or together with a spouse furnishes over half the cost of maintaining the household for one or more qualifying dependents for any period in the taxable year for which the credit is claimed;
(2)] (1) is gainfully employed for any period for which the credit is claimed or, if a joint return is filed, both spouses are gainfully employed; [or one is disabled for any period for which the credit is claimed;
(3) compensates a caregiver for child
day care for a qualifying dependent to enable such resident together with his spouse, if any and if not disabled, to be gainfully employed;
(4) is not a recipient of public assistance under a program of aid to families with dependent children, a program under the New Mexico Works Act or any successor program during any period for which the credit provided by this section is claimed;]
(2) files a joint return if the taxpayer's filing status is "married" on the last day of the taxable year, but the taxpayer is not considered married if the conditions described in either Section 21(e)(3) or 21(e)(4) of the Internal Revenue Code are met; and
[(5)] (3) has [a modified] an adjusted gross income [including child support payments, if any] of not more than the [annual income that would be derived from earnings at double the federal minimum wage] sum of double the annual minimum wage plus four thousand dollars ($4,000).
C. The credit provided for in this section shall be forty percent of the [actual compensation paid to a caregiver by the resident for a qualifying dependent] child day care expenses incurred during the taxable year by the taxpayer not to exceed [four hundred eighty dollars ($480)]:
(1) in taxable years beginning on January 1, 2009, seven hundred twenty dollars ($720) for each qualifying dependent or a total of one thousand eight hundred dollars ($1,800) for all qualifying dependents for a taxable year; or
(2) in taxable years beginning on or after January 1, 2010, nine hundred sixty dollars ($960) for each qualifying dependent or a total of [one thousand two hundred dollars ($1,200)] two thousand four hundred dollars ($2,400) for all qualifying dependents for a taxable year. [For the purposes of computing the credit, actual compensation shall not exceed eight dollars ($8.00) per day for each qualifying dependent.]
D. The amount of the credit computed under Subsection C of this section is reduced by twenty percent, but not below zero, for each one thousand dollars ($1,000) or fraction thereof by which the taxpayer's adjusted gross income exceeds double the annual minimum wage.
[D.] E. The [caregiver] provider of child day care services shall furnish the [resident] taxpayer with a signed statement of compensation paid by the [resident] taxpayer to the [caregiver] provider for child day care services. Such statements shall specify the dates and the total number of days for which payment has been made, and the name, address and taxpayer identification number of the service provider.
[E.] F. If the [resident] taxpayer has a federal tax liability, the taxpayer shall claim from the state not more than the difference between the amount of the state child care credit for which the taxpayer is eligible and the amount of the federal credit for child and dependent care expenses allowed under Section 21 of the Internal Revenue Code that the taxpayer is able to deduct from federal tax liability for the same taxable year; provided, for first year residents only, the amount of the federal credit for child and dependent care expenses may be reduced to an amount equal to the amount of federal credit for child and dependent care expenses the [resident] taxpayer is able to deduct from federal tax liability multiplied by the ratio of the number of days of residence in New Mexico during the [resident's] taxpayer's taxable year to the total number of days in the [resident's] taxpayer's taxable year.
[F.] G. The credit provided for in this section may be deducted from the taxpayer's New Mexico income tax liability for the taxable year. If the credit exceeds the taxpayer's income tax liability, the excess shall be refunded to the taxpayer.
[G. A husband and wife maintaining a household for one or more qualifying dependents and filing separate returns for a taxable year for which they could have filed a joint return:
(1) may each claim only one-half of the credit that would have been claimed on a joint return; and
(2) are eligible for the credit provided in this section only if their joint modified gross income, including child support payments, if any, is not more than the annual income that would be derived from earnings at double the federal minimum wage.]"
Section 2. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2009.
- 7 -