NMSA 1978, § 7-2-18.1 — 7-2-18.1

Credit for expenses for dependent child day care
necessary to enable gainful employment to prevent indigency.

# A.

As used in this section:
(1) "caregiver" means a corporation or an individual eighteen years of age or
over who receives compensation from a resident for providing direct care, supervision
and guidance to a qualifying dependent of the resident for less than twenty-four hours
daily and includes related individuals of the resident but does not include a dependent
of the resident;
(2) "cost of maintaining a household" means the expenses incurred for the
mutual benefit of the occupants thereof by reason of its operation as the principal place
of abode of such occupants, including property taxes, mortgage interest, rent, utility
charges, upkeep and repairs, property insurance and food consumed on the premises.
"Cost of maintaining a household" shall not include expenses otherwise incurred,
including cost of clothing, education, medical treatment, vacations, life insurance,
transportation and mortgages;
(3) "dependent" means "dependent" as defined by Section 152 of the Internal
Revenue Code, as that section may be amended or renumbered, but also includes any
minor child or stepchild of the resident who would be a dependent for federal income tax
purposes if the public assistance contributing to the support of the child or stepchild was
considered to have been contributed by the resident;
(4) "disabled person" means a person who has a medically determinable
physical or mental impairment, as certified by a licensed physician or an advanced
practice registered nurse, certified nurse-midwife or physician assistant working within
that person's scope of practice, that renders such person unable to engage in gainful
employment;
(5) "gainfully employed" means working for remuneration for others, either full
time or part time, or self-employment in a business or partnership; and
(6) "qualifying dependent" means a dependent under the age of fifteen at the
end of the taxable year who receives the services of a caregiver.

# B.

Any resident who files an individual New Mexico income tax return and who is
not a dependent of another taxpayer may claim a credit for child day care expenses
incurred and paid to a caregiver in New Mexico during the taxable year by such resident
if the resident:
(1) singly or together with a spouse furnishes over half the cost of maintaining
the household for one or more qualifying dependents for any period in the taxable year
for which the credit is claimed;
(2) is gainfully employed for any period for which the credit is claimed or, if a
joint return is filed, both spouses are gainfully employed or one is disabled for any
period for which the credit is claimed;
(3) compensates a caregiver for child day care for a qualifying dependent to
enable such resident together with the resident's spouse, if any and if not disabled, to
be gainfully employed;
(4) is not a recipient of public assistance under a program of aid to families
with dependent children, a program under the New Mexico Works Act [Chapter 27,
Article 2B NMSA 1978] or any successor program during any period for which the credit
provided by this section is claimed; and
(5) has a modified gross income, including child support payments, if any, of
not more than the annual income that would be derived from earnings at double the
federal minimum wage.

# C.

The credit provided for in this section shall be forty percent of the actual
compensation paid to a caregiver by the resident for a qualifying dependent not to
exceed four hundred eighty dollars ($480) for each qualifying dependent or a total of
one thousand two hundred dollars ($1,200) for all qualifying dependents for a taxable
year. For the purposes of computing the credit, actual compensation shall not exceed
eight dollars ($8.00) per day for each qualifying dependent.

# D.

The caregiver shall furnish the resident with a signed statement of compensation
paid by the resident to the caregiver for day care services. Such statements shall
specify the dates and the total number of days for which payment has been made.

# E.

If the resident taxpayer has a federal tax liability, the taxpayer shall claim from
the state not more than the difference between the amount of the state child care credit
for which the taxpayer is eligible and the federal credit for child and dependent care
expenses the taxpayer is able to deduct from federal tax liability for the same taxable
year; provided, for first year residents only, the amount of the federal credit for child and
dependent care expenses may be reduced to an amount equal to the amount of federal
credit for child and dependent care expenses the resident is able to deduct from federal
tax liability multiplied by the ratio of the number of days of residence in New Mexico
during the resident's taxable year to the total number of days in the resident's taxable
year.

# F.

The credit provided for in this section may be deducted from the taxpayer's New
Mexico income tax liability for the taxable year. If the credit exceeds the taxpayer's
income tax liability, the excess shall be refunded to the taxpayer.

# G.

A husband and wife maintaining a household for one or more qualifying
dependents and filing separate returns for a taxable year for which they could have filed
a joint return:
(1) may each claim only one-half of the credit that would have been claimed
on a joint return; and
(2) are eligible for the credit provided in this section only if their joint modified
gross income, including child support payments, if any, is not more than the annual
income that would be derived from earnings at double the federal minimum wage.