Oregon Administrative Rules › Chapter 150 - DEPARTMENT OF REVENUE › Division 315 - PERSONAL INCOME TAX CREDITS › Section 150-315-0121 - Working Family Household and Dependent Care Credit

Current through Register Vol. 63, No. 7, July 1, 2024
(1) As used in this rule, references to the
			 Internal Revenue Code (IRC) mean the IRC as in effect on the date specified in
			 ORS 315.004.
(2) Definitions for the purposes of ORS
			 315.264 and this rule:
(a) "Employment-related expenses" means
			 employment-related expenses as defined in IRC section 21, without regard to the
			 limitation in IRC section 21(c).
(b) "Earned income" means earned income as
			 used for the purposes of IRC section 21.
(c) "Qualifying individual" means a
			 qualifying individual as defined in IRC section 21.
(d) "Federal poverty level" means the federal
			 poverty level for the same tax year as determined by the federal Department of
			 Health and Human Services.
(e)
			 "Dependent care benefits" means:
(A) Expenses
			 paid with amounts excluded from income as dependent care benefits under IRC
			 section 129;
(B) Expenses paid
			 from dependent care benefits provided as part of a cafeteria plan under IRC
			 section 125; or
(C) Reimbursement
			 of expenses as part of a flexible spending arrangement under IRC section
			 125.
(f) "Household
			 size" generally means the number of individuals, not to exceed eight, who are
			 related by birth, marriage, or adoption, living in the home, and are allowed as
			 exemptions on the taxpayer's federal return. There are exceptions for disabled
			 qualifying individuals and children whose parents are divorced, legally
			 separated, or permanently living apart. See section (8) of this rule for those
			 household exceptions.
Example 1. Adam and
			 Maggie are married and have one qualifying individual. Maggie is a full-time
			 student for 12 months in 2016. They paid $4,000 in employment-related expenses.
			 Their adjusted gross income is $39,000, which is Adam's wages. Maggie has no
			 earned income. Because Maggie was a full-time student for 12 months of the
			 year, she is considered to have $3,000 ($250 x 12) in attributable earned
			 income. Their credit amount will be a percentage of $3,000, which is the least
			 of their employment-related expenses ($4,000), the expense limitation ($12,000
			 for one qualifying individual), his earned income ($39,000), or her earned
			 income ($3,000).
Example 2: Sophia
			 and Tyler live together but are not married; they file separate tax returns.
			 They are the parents of two children, Ken and Leah. Sophia and Tyler provide
			 equal support to the children. However, because Sophia's adjusted gross income
			 is higher than Tyler's, neither Ken nor Leah is a qualifying child of Tyler
			 unless Sophia releases the exemption for that child to Tyler. Sophia releases
			 the exemption for Ken to Tyler, but not for Leah. Sophia claims Leah and has a
			 household size of two. Tyler claims Ken and has a household size of two. Each
			 parent may only claim one dependent in their household size. Sophia is not able
			 to claim Ken and Tyler is not able to claim Leah in the household size because
			 the other parent is already claiming that child.
Example 3: Marcus and Erin are married and
			 have three children and also support Marcus's parents who do not live with
			 Marcus and Erin in their home. Because they meet the federal tests for claiming
			 individuals not living with them, their federal return allows seven exemptions.
			 Marcus and Erin cannot increase their household size by the people they claim
			 as dependents on their federal return that do not live with them. Their
			 household size for purposes of the Working Family Household and Dependent Care
			 Credit is five.