The Working Family Household and Dependent Care Credit (WFHDC) combines the benefits of Oregon's Working Family Child Care Credit (WFC) and Child and Dependent Care Credit (CDC) into one comprehensive tax credit. The credit can be claimed starting with tax year 2016. The purpose of this credit is to help low- to moderate-income families pay for the care of their dependents while they're working or looking for work.
Who qualifies for this credit?
To qualify, your adjusted gross income must be less than the limit set for your household size. See the instructions for Schedule OR-WFHDC or Schedule OR-WFHDC-NP for those limits.
You must also have qualifying household or dependent care expenses. Qualifying expenses are those expenses that are paid:
- For a qualifying individual to allow you (and your spouse) to work or look for work. They may also be paid if you are married and you or your spouse were attending school or are disabled.
- For household services needed by a qualifying individual or for the care of a qualifying individual.
- To someone who isn't your spouse, the parent of your qualifying individual, or a person you can claim as a dependent.
- By you. Qualifying expenses can be paid with pre-tax dollars from your employer benefits plan.
To qualify, you (and your spouse, if applicable) must have earned income for the year. If either you or your spouse were going to school or is disabled, see the exceptions to this requirement in the instructions for Schedule OR-WFHDC or OR-WFHDC-NP.
You're not allowed to claim the credit if you're filing as married filing separately unless you meet one of the exceptions. See the instructions for Schedule OR-WFHDC or Schedule OR-WFHDC-NP for more information.
Who is a "qualifying individual"?
- A child under age 13 who you can claim as a dependent.
- Your disabled spouse who wasn't able to care for him or herself and lived with you for more than half the year.
- Any disabled person who wasn't able to care for him or herself who you can claim as a dependent or could claim as a dependent except they had a gross income of $4,050 or more; they filed a joint return; or you (or your spouse if filing jointly) could be claimed as a dependent on another taxpayer's return.
What are "household services" and "care of the qualifying individual"?
Household services are the services needed to care for the qualifying individual and to run the home. Costs for the care of the qualifying individual include the services for their well-being and protection. You can include the costs for care provided outside your home for your dependent under age 13 or any other qualifying individual who regularly spends at least eight hours a day in your home.
Qualifying household and dependent care expenses don't include:
- Public, private, or boarding school.
- Summer school or tutoring.
- After-school activities.
- Overnight camps.
- Child support payments.
- Food, lodging, gas, or supplies.
- Late payment or other fees.
Qualifying expenses also don't include items paid by others on your behalf, such as expenses paid or reimbursed by a state social service agency, payments made by another family member, or payments made by the child's other parent.
What counts as proof of expenses?
Proof of expenses include:
- Cancelled checks (front and back), or
- Money order or cashier's check stubs with corresponding bank statements, or
- Duplicate checks with corresponding bank statements, or
- Bank statements showing cash withdrawals, and
- Signed receipts from the provider received at the time of payment.
Receipts should include:
- The qualifying individual's full name.
- Dates of care.
- Amount paid.
- Date paid.
- Name of person or agency paying.
- Provider's name, address, and phone number.
- Provider's tax identification number (SSN or FEIN).
- Method of payment.
We may also ask you to submit a statement from your care provider.
How to claim this credit
Complete a Schedule OR-WFHDC or Schedule OR-WFHDC-NP. You'll be asked to calculate the percentage of qualifying expenses you can claim. You must use the WFHDC online calculator to find your percentage unless you use a tax preparation software that calculates it for you.
Include your schedule with your personal income tax return. You'll also need to claim the credit on your Schedule OR-ASC or Schedule OR-ASC-NP using code 895.
Penalty for falsely claiming the credit
You may be charged a penalty if you knowingly claim or knowingly assist someone else in claiming this credit falsely. The penalty is up to 25 percent of the amount claimed. Your credit will also be adjusted or denied.
If you assist someone in claiming this credit (such as during tax preparation), you should review their supporting documentation to verify that they're eligible for the credit. You should also ask clarifying questions to ensure they're not using false information. Please inform the taxpayer that a penalty may be assessed if they claim the credit and they know they aren't eligible for the credit or the amount of credit they're claiming.