State and federal subsidies are available to help families pay for the high costs of child care. The major types of subsidies in Maine include:
* Child Care Subsidy Program – Child care vouchers are designed to help income-eligible families pay for child care costs while working or in an educational/training program. Eligibility is based on family size and gross household income. A parent fee is then determined based on these two factors. There have been significant changes in the application for Child Care Vouchers. Please click this link, Maine’s Child Care Subsidy Program, for the most current information.
Maine’s 2011 Market Rate Chart
* TANF Transitional Program -TANF transitional child care is available to recipients who received TANF in one of the three months immediately preceding the month of ineligibility. Increased work hours or increased earnings must have caused or contributed to the closure, and the family’s gross income must be equal to or less than 85% of the state’s median income for their family size. Transitional child care services are also available to families in which one or both adults are working; and although they remain financially eligible for TANF, request that their benefits be terminated.
Subsidy information is available at this link, TANF Benefits for Child Care Services.
Child Care Tax Credits
Tax laws change frequently. Please check with the appropriate Federal or State agency for the current regulations regarding Child Care Tax Credits.
There may be Federal and/or State tax credits which can benefit families with young children. Read the summaries below for more information.
Dependent Care Tax Credit
The Maine dependent care state tax credit is equal to 25% of the federal credit for child and dependent care expenses. The credit doubles if the expenses are related to a quality child care provider. This credit is also refundable up to $500.
The Maine legislature passed a law that expands the income tax credit for child care expenses. A Maine taxpayer who enrolls a child in a child care center or home with a Quality Certificate is eligible for a double child care tax credit on their state income tax return. An individual is allowed a credit against the tax otherwise due in the amount of 25% of the federal tax credit allowable for child and dependent care. In the new law, this credit doubles in amount if the child care expenses were incurred through the use of programs with Quality Certificates. The credit may result in a refund of up to $500.
To qualify for the double tax credit, the number from the child care provider’s Quality Certificate will need to be entered on a Maine State Income Tax Return. This is not the number on a child care license, but the 3 digit number on a Quality Certificate. Learn more about Quality Certificates or view a List of Providers with Quality Certificates.
Earned Income Tax Credit
While the Earned Income Tax Credit is not directly related to child care, it is a way that low-income parents can receive money to pay for child care or other expenses.
This is a refundable Federal tax credit for eligible families who work and have earned income under $32,121 (for a taxpayer with more than one child and meets all other qualifying requirements). The EITC reduces the amount of tax owed and it may result in a refund. Taxpayers can get more information about the Earned Income Tax Credit from the Internal Revenue Service at 1-800-829-1040. Publication 596 describes the EITC and is available at your local IRS office or on-line at www.irs.gov.
