$4000 Credit Delivery Update – Check Eligibility

In the first week of March 2024, at La Casa de Esperanza in Waukesha, Governor Tony Evers signed Assembly Bill (AB) 1023, which is currently 2023 Wisconsin Act 101. This law increases the credit from 50% to 100% of the federal credit, reducing the tax burden on families that cannot afford the high cost of adult dependent care and child care.

Act 101 provides over 110,000 Wisconsin taxpayers with an annual tax advantage of approximately $73 million, with an average benefit of more than USD 656 per filer.

$4000 Credit Delivery Updates

  • The new legislation emphasizes the need for a long-term solution that involves direct help for providers and offers a bigger approach to addressing childcare costs in the state by raising the maximum permissible expenses and matching 100% of the FTC, doubling the state’s commitment.
  • Current state law states that a filer’s maximum credit is determined by their income and the total amount of allowable expenses they incur.
  • The credit amounts are as follows: $300 to $525 for one qualifying dependent, and $600 to $1,050 for two or more. The bill states that taxpayers can now claim a maximum credit of $4,000–$7,000 for two or more qualifying dependents, and $2,000–$3,500 for one eligible dependent.
$4000 Credit Delivery Update - Check Eligibility
Image Source – Bharti Axa

Wisconsin’s CTC Legislation

  • Parents/Guardians are eligible for this tax advantage if their child is under the age of 17. The credit amount is determined solely by the parent’s income and the number of children in the family.
  • Under the restructured tax credit legislation, families making $43,000 or more yearly are eligible for future assistance of up to $2,000 for one child and $4,000 for two or more.
  • The actual benefit to any family is limited by their entire state income tax obligation.
  • The maximum permissible expenses under the new framework –  $10,000 for one child and USD 20,000 for two or more.
  • The tax credit is non-refundable, which means that even if it can completely eliminate tax obligations, any remaining credit balance is not refundable.
  • The complex effects of the tax credit on Wisconsin families with lower tax loads would prevent them from completely benefiting from the maximum credit levels

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