How did Kansas expand the employer child day care assistance tax credit?

Plain-English summary

Kansas Notice 22-06 explains changes to the employer child day care assistance tax credit made by 2022 House Bill 2237 (Section 23), which amended K.S.A. 79-32,190. The statute gives a credit against the privilege or income tax for taxpayers that pay for or provide child day care services (or facilities and equipment) for their employees. The bill makes two changes:

1. Shared-services payments (new subsection (a)(4)). For all tax years after December 31, 2020, a taxpayer may claim a credit equal to 50% of the total amount it pays to an organization that provides access to available child day care services for the taxpayer's employees. This covers arrangements where the organization partners with child care providers to share costs and deliver services.

2. Open to more taxpayers (amended subsection (e)). The prior law limited the credit -- for tax years 2013 through 2020 -- to taxpayers subject to the corporate income tax under K.S.A. 79-32,110(c). The amendment ends that corporate-only limitation, so for tax year 2021 and after, all qualifying taxpayers (income and privilege tax) can claim the credit.

Retroactive to 2021. Because these changes are retroactively effective to tax year 2021, a taxpayer that qualifies can claim the credit for 2021 by filing an amended return.

How to claim. Complete Schedule K-56, Child Day Care Assistance Credit, and file it with your Kansas income or privilege tax return.

What this means for you

Employers that help with employee child care

• If you pay an organization that gives your employees access to child day care (a shared-services arrangement), you can claim a credit of 50% of those payments, for tax years after 2020.
• Beginning with tax year 2021, you no longer have to be a corporation to claim the credit -- any qualifying income or privilege taxpayer can.
• Because the change is retroactive to 2021, you can file an amended 2021 return to claim it.

Tax professionals

• Review 2021 returns for clients that provide or pay for employee child care; an amended return may now yield the credit. Claim it on Schedule K-56.

Common questions

What's the new shared-services credit? 50% of amounts paid to an organization that provides employees access to child day care services, for tax years after December 31, 2020.

Who can claim the credit now? For tax year 2021 and after, all qualifying income and privilege taxpayers -- not just corporations.

Is it retroactive? Yes -- to tax year 2021; claim it for 2021 by filing an amended return.

What form do I use? Schedule K-56, filed with your Kansas income or privilege tax return.

Citations and references

• House Bill 2237 (2022), Section 23 -- amended K.S.A. 79-32,190.
• K.S.A. 79-32,190 -- employer child day care assistance credit; new subsection (a)(4) adds a 50% credit for shared-services payments, and amended subsection (e) removes the corporate-only limitation for tax year 2021 and after.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 22-06

Original ruling text

Policy and Research
109 SW 9th Street Phone: 785-368-8222
PO Box 3506 Fax: 785-296-1279
Topeka KS 66601-3506 www.ksrevenue.gov
Mark A. Burghart, Secretary Laura Kelly, Governor

                                        NOTICE 22-06

                          CHILD DAY CARE ASSISTANCE CREDIT

                                     (OCTOBER 4, 2022)

   During the 2022 Legislative Session House Bill 2237 was passed and signed into law.

Section 23 of the Bill amends K.S.A. 79-32,190 which provides a credit for employer provided
child day care services expenditures.

   The Bill amends K.S.A. 79-32,190(a) to add new subparagraph (4) addressing shared

services. The new language amends the statute to provide:

         (a) Any taxpayer that pays for or provides child day care services, including the
   provision of the service of locating such services, to its employees or that provides facilities
   and necessary equipment for child day care services shall be allowed a credit against the
   privilege or income tax imposed by articles 11 and 32 of chapter 79 of the Kansas Statutes
   Annotated, and amendments thereto, as follows:

        (4) for all taxable years commencing after December 31, 2020, 50% of the amount
   equal to the total amount expended during the taxable year by a taxpayer as payments to an
   organization providing access to available child day care services for the taxpayer's
   employees.

   This addition provides a tax credit for those entities making payments to an organization that

is partnering with child care providers to share costs and deliver services.

  The Bill also amends K.S.A. 79-32,190(e) to limit the period during which only corporate

income tax filers could claim the credit. The amended language provides:

         (e) For tax year years 2013 and all tax years thereafter through 2020, the income tax
   credit provided by this section shall only be available to taxpayers subject to the income tax
   on corporations imposed pursuant to subsection (c) of K.S.A. 79-32,110 (c), and amendments
   thereto, and shall be applied only against such taxpayer's corporate income tax liability.

  To claim the credit, complete and submit Schedule K-56 Child Day Care Assistance Credit

with your Kansas income or privilege tax return.

  As provided in the amendment, the new credit provision and removal of the limitation which

allowed only corporate income taxpayers to claim the credit is retroactively effective to tax year
2021. As a result, all taxpayers (income and privilege tax) that qualify can claim the credit. To

claim the credit for tax year 2021 an amended return should be filed. Forms, instructions, and
other information about filing an amended return are available through the Department's website
at: www.ksrevenue.gov.

                                TAXPAYER ASSISTANCE

 Additional copies of this notice, forms or publications are available from our web site,

www.ksrevenue.gov. If you have questions about this Notice, please contact:

                             Taxpayer Assistance Center
                            Kansas Department of Revenue
                            Scott Office Building, 1st Floor
                                   120 SE 10th Ave
                                    P. O. Box 3506
                               Topeka, KS 66601-3506
                                 Phone: 785-368-8222
                                  Fax: 785-291-3614