This tax credit was created to assist providers as they make investments in their centers or homes to improve the quality of child care provided. The Office of Child Care and Head Start will certify if an investment contributed significantly toward the goal of providing quality child care services.
If you are an individual taxpayer, in order to qualify for the tax credit you will need to have expended $10,000 in one year. For example, if you spent $10,000 during 2001 on expenses that are certified as significantly improving the quality of child care services, you will receive a $1,000 tax credit each year for 10 years and a $10,000 credit at the end of the 10-year period.
A corporation, financial institution, partnership, LLC, S-corporation, estate or trust, will receive a tax credit of 30% of the expenses that were certified as quality improvements up to 30% of $30,000. For example, if you were certified for a $7,000 expense you would receive a $2,100 credit that year.
The credit may not reduce the tax otherwise due below zero. Any unused portion of the credit may be carried over to the following year or years until exhausted.
Maine child care providers will need to apply to the Office of Child Care and Head Start, Department of Health and Human Services, for certification of their expenses prior to filing their taxes.
For more information see:
Child Care is a business. If you are considering starting a family child care home, child care center, or nursery school, you will not only need to prepare for providing care for children, but also for financial and business management.
Many organizations provide support to small businesses, sometimes at no or minimal cost. Contact them for more information about the services available:
- U.S. Small Business Administration
- Maine Small Business Administration
- University of Maine Cooperative Extension
- Coastal Enterprises, Inc.
As you manage your small business, you will need to adopt a record keeping system. Many of the child care professional organizations offer tips and ideas about effective management.
Contact them for more information:
- National Association for the Education of Young Children
- National Association for Family Child Care
- National Association of Child Care Resource and Referral Agencies
- National Child Care Association
- National Child Care Information Center
- National Network for Child Care