How to Claim the WV Child and Dependent Care Credit
A guide for West Virginia taxpayers on the new Child and Dependent Care Credit, clarifying how to correctly claim this benefit on a state tax return.
West Virginia offers a tax credit to assist families with child and dependent care costs, providing financial relief for those balancing work and family responsibilities. This credit directly reduces the amount of state income tax owed by eligible taxpayers. It is for working individuals who pay for the care of a qualifying dependent to allow them to be employed or actively seek employment.
Determining Your Eligibility
To qualify for the West Virginia Child and Dependent Care Credit, you must first meet the requirements for the federal credit. This means you must have qualified for and claimed the Child and Dependent Care Credit on your federal income tax return using IRS Form 2441. If you do not claim the credit on your federal return, you cannot claim it on your West Virginia return.
The taxpayer must be a resident of West Virginia to be eligible for this tax benefit. This ensures that the tax relief is directed to individuals and families living within the state.
The definition of a qualifying individual for the state credit mirrors the federal guidelines. A qualifying person is your dependent child who was under age 13 when the care was provided. It can also include a spouse or another dependent who was physically or mentally incapable of self-care and lived with you for more than half of the year.
Eligibility is tied to the federal credit, so the income phase-outs that apply at the federal level will determine your eligibility for the West Virginia credit. Taxpayers should refer to the instructions for federal Form 2441 to understand how their adjusted gross income (AGI) affects the amount of their qualifying expenses.
Calculating the Credit Amount
The West Virginia credit is 50% of the federal Child and Dependent Care Credit you are allowed. This direct calculation method simplifies the process for taxpayers.
To understand the state credit, you must first grasp the basis of the federal credit. The federal credit is calculated on a portion of the work-related expenses you paid for the care of a qualifying individual. For federal purposes, you can use up to $3,000 of expenses for one qualifying person or up to $6,000 for two or more qualifying persons to calculate the credit.
The West Virginia credit is nonrefundable. This means the credit can reduce your state income tax liability to zero, but you cannot receive any portion of the credit back as a cash refund. If the calculated credit amount is greater than the total state tax you owe, the excess amount is not returned to you.
For a practical example of the calculation, consider a taxpayer who has two children and incurred $7,000 in child care expenses. Based on federal rules, they can use $6,000 of those expenses to calculate the federal credit. If, based on their income, their federal credit is determined to be $1,200, their nonrefundable West Virginia credit would be $600 ($1,200 x 0.50).
Information and Forms Needed to Claim the Credit
To claim the West Virginia Child and Dependent Care Credit, you must complete the state-specific form, Schedule WV/CDCC. It is important to use the correct form for the corresponding tax year.
Schedule WV/CDCC can be downloaded from the West Virginia State Tax Department website. The department’s website has a forms library where taxpayers can find current and prior-year tax forms and instructions.
Before filling out Schedule WV/CDCC, you will need the final amount of your federal credit from Form 2441. You also need the full name and Social Security Number for each qualifying dependent, and the name, address, and Taxpayer Identification Number for each care provider.
Completing the form involves transferring this information into the appropriate fields on Schedule WV/CDCC. The information must match what was reported on your federal tax return.
How to File for the Credit
After you complete Schedule WV/CDCC, the final credit amount must be transferred to your main state income tax return, Form IT-140. You will enter this figure on the specific line for nonrefundable tax credits. Consult the instructions for Form IT-140 for the exact line number.
The completed Schedule WV/CDCC must be submitted with your primary tax return. You must attach the schedule to your Form IT-140 before you file. Failure to do so will result in the disallowance of the credit.
If you are using an electronic filing service, the software will handle the attachment of Schedule WV/CDCC automatically. For those filing by mail, you must physically include the completed schedule with your Form IT-140 before mailing it to the West Virginia State Tax Department.