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Tax Credits

Important Notice - Change to Dependent Care Tax Credit

HB 2171 combines the existing Working Family Child Care and Dependent Care tax credits into a single Working Family Child and Dependent Care tax credit for the tax years 2016 through 2021. The purpose of this tax credit is to enable low-income working families to care for young children and disabled dependents  by offsetting costs so that they may be gainfully employed or attend school full time. “Applicable to tax years 2016-2022”. 
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Child Care Contribution Tax Credit

Contribution Tax Credit 
Contribution Tax Credit
There is a commonly expressed view that America is experiencing market failure in the child care sector. Economists describe market failure as a situation in which a market left on its own fails to allocate resources efficiently and efficiently. 
 
Although child care providers are among the state’s lowest-paid workers, parents still struggle to afford the cost of care. Conversely, if parents want high quality care for their children, the cost is often beyond their financial means. 
 
In 2003, the state legislature recognized this disparity in the child care system by enacting the Oregon Child Care Contribution Tax Credit. By making a contribution to the program, taxpayers receive an Oregon state tax credit of 50 cents for each dollar contributed.
 
Proceeds from the credits will be used to create a demonstration project to show how child care can work when adequately funded. By simultaneously addressing quality, affordability and provider compensation, this innovative tax credit program will reveal the true cost of quality child care and help to restore balance in this critical sector of Oregon’s economy 

 
Click here to download a PDF version of the Child Care Contribution Tax Credit form
 
For more information on the Child Care Contribution Tax Credit Click Here
 
How Much is left for 2016?
 
Contributions available as of August 25, 2016: $977,700.00.
 
For more information on the availability of the Contribution Tax Credit call 503.947.3121.
 This page will be updated periodically. 
 
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Dependent Care Tax Credit

 
Thank you for your current and previous participation in the Oregon Employer Provided Dependent Care Tax Credit Program. We want to make you aware of a legislative change that will take effect January 1, 2016.
 
Earlier this year, new legislation was enacted that impacts the program. Specifically, House Bill 2171 combines the existing Working Family Child Care and the Child and Dependent Care tax credits into a single Working Family Child and Dependent Care tax credit for the tax years 2016 through 2021. The purpose of this new combined tax credit is to enable low-income working families to access care for young children and dependents with disabilities by offsetting costs of care so they can be gainfully employed or attend school full time.
 
The Oregon Employer Provided Dependent Care Tax Credit will sunset as of December 31, 2015. The Early Learning Division will no longer issue certificates starting with tax year 2016 as the tax credit will not be available as of January 1, 2016. The Early Learning Division does not give tax advice, so we encourage you to talk to your accountant or tax consultant for more information.
Contributions available as of August 5, 2016: $990,000.00.
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Child Tax Credit

 
Claiming the Child Tax Credit
 
IRS Tax Tip 2006-45

With the Child Tax Credit, you may be able to reduce the federal income tax you owe by up to $1,000 for each qualifying child under the age of 17.
A qualifying child for this credit is someone who meets the following criteria:

• Dependent Is claimed as your dependent 
• Age Was under age 17 at the end of 2011 
• Relationship Is your son, daughter, adopted child, grandchild, stepchild or eligible foster child, your sibling, stepsibling or their descendant  
• Citizenship Is a U.S. citizen or resident alien
 
The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status:

• Married Filing Jointly              $110,000 
• Married Filing Separately       $  55,000 
• All others                                 $  75,000
 
In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.
 
If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim some or all of the difference as an “additional” Child Tax Credit. The additional Child Tax Credit may give you a refund even if you do not owe any tax.  For 2005, the total amount of the Child Tax Credit and any additional Child Tax Credit cannot exceed the maximum of $1,000 for each qualifying child.
 
You may claim the Child Tax Credit on Form 1040 or 1040A. Details on how to compute the credit can be found in the forms’ instructions and in Publication 972, Child Tax Credit. The forms and publications are available from the IRS Web site at IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).
 
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