Who qualifies for child-care tax credits?

The Boston-based Child Care Information Exchange provides some of the information. Who is eligible?

Parents who are employed either part-time or full-time or are actively looking for work. Children must be under 15 and considered legal dependents.

What is the present credit?

The current law provides a nonrefundable credit of 20 percent of dependent care expenses up to a maximum credit of $400 a year for one child; $800 for two or more.

What is the bill before Congress?

Legislation sponsored by Rep. Barber B. Conable (R) of New York and others would replace the present 20 percent credit with a credit tied to family income. Families with adjusted gross incomes of $10,000 or less would be eligible for a 50 percent credit. The credit percentage would be reduced in relation to the amount of family income above $10,000 up the the $40,000 level, where the credit would stabilize at 20 percent. The maximum on expenses would be raised from $2, 000 annually for the first child to $2,400; from $4,000 to $4,800 for two or more children.

What type of care qualifies?

Payments made to day-care centers, nursery schools, family day-care providers , and babysitters all qualify for credit as long as the care is needed to allow the parent to work.

Do payments made to relatives qualify?

Yes, as long as these relatives are not dependents of the one applying for tax credits, and if these relatives are providing child care as employees of another organization or as employees for whom you are withholding social-security taxes.

If child-care fees are partially subsidized, do they still qualify?

One can consider any portion of the fee that is paid by the taxpayer. That paid by another party -- whether the center itself through a scholarship or the government through a subsidy -- cannot be claimed as an expense.

Does this credit apply to state taxes also?

No. Only federal income taxes. But some states now have or are considering an addition al credit for state income taxes.