HARRISBURG, PA – With less than a month to go before the deadline for filing personal income tax returns, the Department of Revenue is reminding Pennsylvanians that there is a new state tax credit available that can help ease child and dependent care costs for working families.
Eligible Pennsylvanians can claim the Child and Dependent Care Enhancement Tax Credit when they file their Pennsylvania Personal Income Tax Return (PA-40). This credit can range between $180 and $630, depending on your income level and the number of your dependents.
“We estimate there are more than 220,000 families in Pennsylvania that can benefit from this credit when they file their state tax returns,” said Acting Secretary of Revenue Pat Browne. “Research has shown that the expansion of a similar tax credit on the federal level significantly reduced childhood poverty, addressed food insecurity, and helped many families secure their finances. We want to ensure that the state tax credit in Pennsylvania has a similar impact, so the Shapiro Administration is working to get the word out and help everyone that is eligible receive this benefit.”
This tax credit program was established to help working individuals and families pay for child and dependent care services necessary for them to maintain their jobs or seek employment. That, in turn, allows them to provide for their families and contribute to the economic growth of the Commonwealth.
Who Qualifies & How Much is Available?
The Child and Dependent Care Enhancement Tax Credit that is available to Pennsylvanians is based on the federal Child and Dependent Care Tax Credit. That means that taxpayers must receive the federal credit to also be eligible for the state credit in Pennsylvania. The state credit is equal to 30 percent of the federal credit, meaning it will be:
$180 (one child) or $360 (two or more children) for households earning above $43,000; or
$315 (one child) or $630 (two or more children) for households earning less than $43,000.
In order to claim the credit on your PA Personal Income Tax Return (PA-40), you must have incurred care expenses for:
A dependent child under age 13.
A spouse who was physically or mentally incapable of self-care and lived with you for more than half the year.
An individual who was physically or mentally incapable of self-care lived with you for more than half the
year; and either:
Was your dependent; or
Could have been your dependent, except that he or she received a gross income of $4,400 or more, filed a joint return, or could have been claimed as a dependent on another taxpayer’s return.
This credit is refundable, meaning qualified taxpayers will not owe any state taxes on the amount they receive.
myPATH is a Free Option to Request PA Credit on Your Return
When filing your PA Personal Income Tax Return (PA-40), you will need to complete PA Schedule DC–an additional form that allows you to report information related to your dependents and the expenses incurred for their care. Additionally, you must attach completed versions of Federal Form 2441 and 1040 Schedule 3 to your PA-40. These forms are required to claim the federal Child and Dependent Care Tax Credit on the federal Individual Income Tax Return (Form 1040).
One easy way to file your PA-40 and the Schedule DC is to use myPATH, the Department of Revenue’s free online filing system. This system is user-friendly; and walks the taxpayer through all the necessary steps for filing your PA return.
For example, myPATH will prompt the taxpayer with a question that asks whether they paid child or dependent care expenses. That’s when they’ll be able to enter the necessary information that will automatically fill out the Schedule DC on their behalf. There will also be an option to upload the completed federal forms — 2441 and 1040 Schedule 3 — before completing the submission of your PA return.
The deadline to file 2022 personal income tax returns is Tuesday, April 18. For more information on PA taxes, including free forms and instructions, visit revenue.pa.gov.
