SECTION REFERENCES ARE TO THE INTER NAL REVENUE CODE.
Purpose of Form
Employers use Form 8882 to claim the credit for qualified childcare facility and resource and referral expenditures. The credit is part of the general business credit. You may claim the credit any time within 3 years from the due date of your return on either an original or amended return.
How To Figure the Credit
The credit is 25% of the qualified childcare facility expenditures plus 10% of the qualified childcare resource and referral expenditures paid or incurred during the tax year. The credit is limited to $150,000 per tax year.
Qualified childcare facility expenditures are amounts paid or incurred:
●To acquire, construct, rehabilitate, or expand property that:
1.Is to be used as part of a qualified childcare facility of the taxpayer,
2.Is depreciable (or amortizable) property, and
3.Is not part of the principal residence of the taxpayer or any employee of the taxpayer;
●For the operating expenses of a qualified childcare facility of the taxpayer, including expenses for training of employees, scholarship programs, and providing increased compensation to employees with higher levels of childcare training; or
●Under a contract with a qualified childcare facility to provide childcare services to employees of the taxpayer.
Note. Any expenses for childcare included in qualified childcare facility expenditures may not exceed the fair market value of such care.
A qualified childcare facility is a facility that meets the requirements of all applicable laws and regulations of the state or local government in which it is located, including the licensing of the facility as a childcare facility. The following conditions must also be met.
●The principal use of the facility must be to provide childcare (unless the facility is also the personal residence of the person operating the facility).
●Enrollment in the facility must be open to employees of the taxpayer during the tax year.
●If the facility is the principal trade or business of the taxpayer, at least 30% of the enrollees of the facility must be dependents of employees of the taxpayer.
●The use of the facility (or the eligiblity to use the facility) must not discriminate in favor of highly compensated employees.
Qualified childcare resource and referral expenditures are amounts paid or incurred under a contract to provide childcare resource and referral services to employees of the taxpayer. The provision of the services (or the eligibility to use the services) must not discriminate in favor of highly compensated employees.
No Double Benefit Allowed
You must reduce:
●The basis of any qualified childcare facility by the amount of the credit on line 7 allocable to capital expenditures related to the facility,
●Any otherwise allowable deductions used to figure the credit by the amount of the credit on line 7 allocable to those deductions, and
●Any expenditures used to figure any other credit by the amount of the credit on line 7 allocable to those expenditures (for purposes of figuring the other credit).
Note. For credits entered on line 5, only the pass-through entity is required to make this reduction.
Recapture of Credit
You may have to recapture part or all of the credit if, before the 10th tax year after the tax year in which your qualified childcare facility is placed in service, the facility ceases to operate as a qualified childcare facility or there is a change in ownership of the facility. However, a change in ownership will not require recapture if the person acquiring the interest in the facility agrees, in writing, to assume the recapture liability. See section 45F(d) for details.
Any recapture tax is reported on the line of your tax return where other recapture taxes are reported (or, if no such line, on the “total tax” line). The recapture tax may not be used in figuring the amount of any credit or in figuring the alternative minimum tax.
All members of a controlled group of corporations (within the meaning of section 52(a)) and all partnerships, corporations, unincorporated businesses, and other persons under common control (within the meaning of section 52(b)) are treated as one person for purposes of the credit. The group member who would have the largest credit if this rule did not apply completes Form 8882, Part I, figures the group credit on line 7, and skips Part II. On separate Forms 8882, each member (including the member who completed the group Form 8882) skips lines 1 through 6 and enters its share of the group credit on line 7. Each member then completes Part
IIon its separate form (or Form 3800, if required). Each member also must attach a statement showing how the group credit was divided among all members. The members share the credit on line 2 in the same proportion that they contributed qualified childcare facility expenditures and share the credit on line 4 in the same proportion that they contributed qualified resource and referral expenditures.
For more details, see section 45F.
Current Year Credit
Figure the credit for expenditures you paid on lines 1 through
4.Do not complete lines 1 through 4 for credits allocated to you from S corporations, partnerships, estates, or trusts; instead, complete line 5.
Enter your qualified childcare facility expenditures (defined above) paid or incurred during the tax year.
Enter your qualified childcare resource and referral expenditures (defined above) paid or incurred during the tax year.
Enter the amount of credit that was allocated to you as a partner, shareholder, or beneficiary. Also enter the employer identification number (EIN) of the pass-through entity. If you received a credit from more than one pass-through entity, write “see attached” in the entry space for the EIN, and attach a statement showing the EIN and credit amount for each pass-through entity.