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006.05.307-26-51-502. HOUSEHOLD AND DEPENDENT CARE SERVICES

AR ADC 006.05.307-26-51-502Arkansas Administrative Code

West's Arkansas Administrative Code
Title 006. Department of Finance and Administration
Division 05. Division of Revenues
Rule 307. Comprehensive Individual Income Tax Regulations (Refs & Annos)
Ark. Admin. Code 006.05.307-26-51-502
006.05.307-26-51-502. HOUSEHOLD AND DEPENDENT CARE SERVICES
1.26-51-502(a)&(b)(1) General Requirements for the Credit
A credit against individual income tax owed to the State of Arkansas is allowed for expenses associated with household and dependent care services that are necessary for the taxpayer to obtain or hold gainful employment. Section 21 of the Internal Revenue Code of 1986, as amended and in effect on January 1, 1997, has been adopted for purposes of calculating this credit. The corresponding Treasury Regulation, as of January 1, 1993 remains IRC Reg. 1.44A-1.
As set forth in IRC Reg. 1.44A-1 (1993), five (5) general requirements must be satisfied before the credit can be taken:
1. The taxpayer must maintain a household. IRC Reg. 1.44A-1(a)(2) and (d);
2. One or more “qualifying individuals” must be a member of the taxpayer's household. IRC Reg. 1.44A-1(a)(2) and (b);
3. The household and dependant care expenses must be necessary for the taxpayer to obtain or hold gainful employment. IRC Reg. 1.44A-1(a)(2) and (c);
4. The services provided, whether they are provided inside the household or outside the household (including services provided by dependent care centers), must meet the specific requirements of IRC Sec. 21. IRC Reg. 1.44A-1(c)(2), (c)(3), (c)(4) and (c)(5).
5. The household and dependent care expenses must actually be paid during the tax year for which the credit is being claimed. IRC Reg. 1.44A-1(a)(3).
1.26-51-502(b)(2) Ten Percent (10%) Standard Credit
The amount of the credit shall be ten percent (10%) of the total federal credit allowable under IRC Sec. 21 as in effect on January 1, 1997.
1.26-51-502(c)(1) Twenty Percent (20%) Approved Child Care Facility Credit
A credit against individual income tax owed to the State of Arkansas is allowed for expenses incurred by a “qualified individual” for child care services provided by an “approved child care facility.” The amount of this credit shall be twenty percent (20%) of the total federal household and dependent care credit allowed under Section 21 of the Internal Revenue Code as in effect on January 1, 1993. Three (3) general requirements must be satisfied before the credit can be taken:
1. A federal household and dependent care credit must be allowable under IRC Sec. 21 as in effect on January 1, 1993.
2. A “qualified individual” is a taxpayer who:
i. Has a dependent child with respect to whom the taxpayer is entitled to a credit under ACA 26-51-501(a)(3); and
ii. Incurs child care expenses necessary to obtain or hold gainful employment at an approved child care facility;
3. An approved child care facility is a child care facility which:
i. Provides an “appropriate early childhood program.” Such programs are developmentally appropriate for young children, ages three through five (3-5), and are approved by the Arkansas Department of Education; and
ii. Has been certified by the Arkansas Department of Education. ACA 6-45-109.
2.26-51-502(c)(1) Refundability
The twenty percent (20%) Arkansas “approved child care facility” credit is refundable. The excess of this credit over the taxpayer's Arkansas tax liability will be returned to the taxpayer as an overpayment of tax.
1.26-51-502(c)(2) Election of Credits
A taxpayer cannot claim both the 10 percent and the 20 percent child care credit on the same expenses. If an individual has a federal child care credit that includes expenses from a facility that qualifies for the 20 percent credit and expenses from a facility that only qualifies for the 10 percent credit, the credit must be prorated based on the number of days the child attended each facility.
1.26-51-503 Tax Credit - Mentally Retarded Child
A taxpayer who is maintaining, supporting and caring for a mentally retarded child shall be entitled to a $500.00 credit per tax year for the child. If the taxpayer is caring for more than one mentally retarded child, the taxpayer shall be entitled to one $500.00 credit per child.
REQUIREMENTS
The following criteria must be satisfied in order to properly claim the exemption:
1. A physician (medical doctor) must certify in writing that the child is mentally retarded. Such certification shall be valid for state income tax purposes for five (5) years.
2. The individual must meet the eligibility requirements for admission to a Human Development Center, (ACA 20-48-404) which are:
a The taxpayer has resided in the state of Arkansas for at least three (3) years prior to the claim for credit;
b The child is so mentally deficient that he is incapable of managing himself or his affairs, and his welfare requires the special care, training, and education provided at a center; and
c The child's physician has used standard tests and examinations in determining that the child is mentally deficient and in need of the special training provided at a Human Development Center.
3. The mentally retarded child must be:
a. The taxpayer's biological child; or
b. The taxpayer's adopted child; or
c. Clearly related by blood to the taxpayer.
4. The taxpayer must be caring for the mentally retarded child in the taxpayer's home.
Current with amendments received through May 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 006.05.307-26-51-502, AR ADC 006.05.307-26-51-502
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