35 Miss. Admin. Code Pt. X, Ch. 07 — Child/Dependent Care Credit

100 An income tax credit is allowed to any employer providing dependent care for its employees
during the employee's working hours. The credit allowed is 25% of qualified expenses.
Starting January 1, 1998 the credit allowed is 50% of qualified expenses. This credit can offset
up to 100% of the income tax due from the entity. Any excess credit will not be refunded, but
can be carried forward for up to five (5) years.
101 An employer must have its child care program certified by the Department of Health for
programs serving children twelve (12) years of age or younger and for programs serving
elderly adults. The State Tax Commission certifies programs serving dependents older than
twelve (12) years of age. To request certification from the Tax Commission, the employer
should submit a letter explaining the employer's child care program and specifically requesting
certification for child care credit. A copy of the certification from the Department of Health
must be furnished by the taxpayer to the Tax Commission when the certification is granted.
Information concerning the Department of Health's certification may be obtained at the
following office: Mississippi State Department of Health, Division of Child Care and Special
Licensure, Post Office Box 1700, Jackson, MS 39215-1700.
102 To qualify, the facility must have an average daily enrollment for the taxable year of no less
than six (6) children who are twelve (12) years of age or younger and be licensed according to
the regulations governing licensure of child care facilities in Mississippi; or must serve five (5)
or fewer children and/or elderly adults in a family child care/elder care home approved by the
Department of Health for participation in the United States Department of Agriculture child
and adult nutrition program; or must serve children over twelve (12) years of age but less than
eighteen (18) years of age in either a community-based facility or a facility at the employment
site; or must serve adult relatives of employees in either a community based elder-care facility
or a facility at the employment site; or must serve children or adult dependents having
physical, emotional or mental disabilities in either a community -based facility or a facility at
the employment site.
103 The net cost of any contract executed by the employer for a third party to provide dependent
care is a qualified expense. If the employer elects to provide dependent care directly, then the
qualified expenses are expenses for staff, learning and recreational materials and equipment,
and cost associated with the construction and maintenance of a facility. Additional eligible
expenses include costs assumed by the employer which increases the quality, availability and
affordability of dependent care in the community used by employees during the employee's
work hours. For facilities and equipment, the eligible expense is the amount of depreciation
expense allowable in computing taxable income. These cost are net of any reimbursement.
104 Any unused credit may be carried over for 5 years. An expense cannot be used both as a
deduction and as the basis for a credit. Any expense used in computing the allowable credit
cannot be taken as a deduction. The expense must be added back to Mississippi taxable
income.
105 The credit cannot be used by any business enterprise or corporation other than the business
enterprise actually qualifying for the credits. Credit received by a partnership, LLC or an S -
Corporation may be passed through to offset tax due from the activity that created the credit.
The credit is subject to the same limitations that the pass through entity would have had. The
tax due on salaries or wages paid by an S-Corporation and guaranteed payments to partners by
a partnership cannot be offset by the credit.
106 The credit is not refundable. The Child Care Credit may offset up to 100% of the tax due. It
may also be used in combination with any of the other credits.
107 To apply for this credit: You must have had your program previously certified and have
furnished a copy of the certification to the Tax Commission. You must attach a schedule
showing the computation to the return.
108 This credit is authorized under Section 57-73-23 of the Mississippi Code of 1972, as amended.
109 This regulation is effective January 1, 2001.
110 (Reserved)
111 (Reserved)