Personal and Corporate Income or Excise Tax Credits
Working family child care
(1)As used in this section:
(a)“Child care” means care provided to a qualifying child of the taxpayer for the purpose of allowing the taxpayer to be gainfully employed, to seek employment or to attend school on a full-time or part-time basis, except that the term does not include care provided by:
(A)The child’s parent or guardian, unless the care is provided in a certified or registered child care facility; or
(B)A person who has a relationship to the taxpayer that is described in section 152(a) of the Internal Revenue Code who has not yet attained 19 years of age at the close of the tax year.
(b)“Child care expenses” means the costs associated with providing child care to a qualifying child of a qualified taxpayer.
(c)“Disability” means a physical or cognitive condition that results in a person requiring assistance with activities of daily living.
(d)“Earned income” has the meaning given that term in section 32 of the Internal Revenue Code.
(e)“Qualified taxpayer” means a taxpayer:
(A)Who is an Oregon resident with at least $6,000 of earned income for the tax year or who is a nonresident of Oregon with at least $6,000 of earned income from Oregon sources for the tax year;
(B)With federal adjusted gross income for the tax year that does not exceed 250 percent of the federal poverty level;
(C)With Oregon adjusted gross income for the tax year that does not exceed 250 percent of the federal poverty level; and
(D)Who does not have more than the maximum amount of disqualified income under section 32(i) of the Internal Revenue Code that is allowed to a taxpayer entitled to the earned income tax credit for federal tax purposes.
(f)“Qualifying child” has the meaning given that term in section 152(c) of the Internal Revenue Code, determined without regard to section 152(c)(1)(D) of the Internal Revenue Code or section 152(e) of the Internal Revenue Code, except that it is limited to an individual who is under 13 years of age, or who is a child with a disability, as that term is defined in ORS 316.099 (Credit for early intervention services for child with disability).
(2)A taxpayer is not disqualified from claiming the credit under this section solely because the taxpayer’s spouse has a disability, if the disability is such that it prevents the taxpayer’s spouse from providing child care, being gainfully employed, seeking employment and attending school. The Department of Revenue may require that a physician verify the existence of the disability and its severity.
(3)A qualified taxpayer shall be allowed a credit against the taxes otherwise due under ORS chapter 316 equal to the applicable percentage of the qualified taxpayer’s child care expenses (rounded to the nearest $50).
(4)The applicable percentage to be used in calculating the amount of the credit provided in this section shall be determined in accordance with the following table:
(5)The department may:
(a)Adopt rules for carrying out the provisions of this section; and
(b)Prescribe the form used to claim a credit and the information required on the form. The form may provide for verification of an individual’s disability by a physician, if applicable, as described in subsection (2) of this section.
(6)In the case of a credit allowed under this section:
(a)A nonresident shall be allowed the credit under this section in the proportion provided in ORS 316.117 (Proration between Oregon income and other income for nonresidents, part-year residents and trusts).
(b)If a change in the status of a taxpayer from resident to nonresident or from nonresident to resident occurs, the credit allowed by this section shall be determined in a manner consistent with ORS 316.117 (Proration between Oregon income and other income for nonresidents, part-year residents and trusts).
(c)If a change in the taxable year of a taxpayer occurs as described in ORS 314.085 (Taxable year), or if the Department of Revenue terminates the taxpayer’s taxable year under ORS 314.440 (Tax as debt), the credit allowed under this section shall be prorated or computed in a manner consistent with ORS 314.085 (Taxable year).
(d)In the case of a qualified taxpayer who is married, a credit shall be allowed under this section only if:
(A)The taxpayer files a joint return;
(B)The taxpayer files a separate return and is legally separated or subject to a separate maintenance agreement; or
(C)The taxpayer files a separate return and the taxpayer and the taxpayer’s spouse reside in separate households on the last day of the tax year with the intent of remaining in separate households in the future.
(7)If the amount allowable as a credit under this section, when added to the sum of the amounts allowable as payment of tax under ORS 316.187 (Amount withheld is in payment of employee’s tax) (withholding), ORS 316.583 (Effect of payment of estimated tax or installment) (estimated tax), other tax prepayment amounts and other refundable credit amounts, exceeds the taxes imposed by ORS chapters 314 and 316 for the tax year (reduced by any nonrefundable credits allowable for purposes of ORS chapter 316 for the tax year), the amount of the excess shall be refunded to the taxpayer as provided in ORS 316.502 (Distribution of revenue to General Fund).
(8)(a) The minimum amount of earned income a taxpayer must earn in order to be a qualified taxpayer shall be adjusted for tax years beginning in each calendar year by multiplying $6,000 by the ratio of the monthly averaged U.S. City Average Consumer Price Index for the 12 consecutive months ending August 31 of the prior calendar year over the monthly averaged index for the second quarter of the calendar year 1998.
(b)As used in this subsection, “U.S. City Average Consumer Price Index” means the U.S. City Average Consumer Price Index for All Urban Consumers (All Items) as published by the Bureau of Labor Statistics of the United States Department of Labor.
(c)If any adjustment determined under paragraph (a) of this subsection is not a multiple of $50, the adjustment shall be rounded to the nearest multiple of $50.
(d)Notwithstanding paragraphs (a) to (c) of this subsection, the adjusted minimum amount of earned income a taxpayer must earn may not exceed the amount an individual would earn if the individual worked 1,040 hours at the minimum wage established under ORS 653.025 (Minimum wage rate) and in effect on January 1 of the calendar year in which begins the tax year of the taxpayer, rounded to the next lower multiple of $50. [1997 c.692 §2; 1999 c.998 §1; 2001 c.114 §32; 2001 c.660 §10; 2001 c.867 §1; 2003 c.46 §33; 2003 c.473 §11; 2005 c.49 §1; 2005 c.832 §25; 2007 c.70 §83; 2007 c.868 §1; 2009 c.909 §41]
Notes of Decisions
State could not recalculate tax for tax year closed to review in order to prevent elective carry forward of tax credit to tax year subject to review. Smurfit Newsprint Corp. v. Dept. of Revenue, 329 Or 591, 997 P2d 185 (2000)