School Readiness Tax Credits for Businesses
For more background information on the School Readiness Tax Credits, click here.
There are two types of School Readiness Tax Credits (SRTC) available to businesses/employers:
A refundable state tax credit for donations made to Child Care Resource and Referral agencies, also known as R&Rs, and
A refundable state tax credit based on a percentage of the “eligible expenses” incurred in support of child care centers participating in Quality Start, Louisiana's quality rating system for early learning centers.
1) Tax Credit For Donations To Resource And Referral Agencies—R.S. 47:6107
Businesses may receive a tax credit for donations made directly to Louisiana Resource & Referral Agencies (R&Rs). These R&Rs are private, non-profit, community based organizations that contract with the Louisiana Department of Education to provide training, technical assistance and other supports to child care centers and parents of young children. This is a $1 for $1 credit equal to the amount donated, up to $5,000 per tax year.
This refundable credit can be taken against individual income tax, corporation income tax, or corporation franchise tax depending on the business’s entity type as follows:
Individual income tax credit — If the business making the donation is owned by a sole proprietor or a flow-through entity such as a Limited Liability Company (LLC), Partnership, Subchapter S corporation, the credit will be claimed on the Resident Individual Income Tax return, Form IT-540, Schedule F, or the Nonresident and Part-Year Resident Individual Income Tax Return, Form IT-540B, Schedule F-NR. Partners and shareholders should apportion the credit based on the each partner or shareholder’s percentage of ownership.
Corporation income or franchise tax credits — If the business making the donation is a corporation or C-corporation, the credit will be claimed on the Corporation Income and Franchise Tax Return, Form CIFT-620, Schedule RC.
Nonprofit Organizations — If the business making the donation is a nonprofit organization, the tax credit must be taken on the Corporation Income and Franchise Tax Return, Form CIFT-620, Schedule RC. If the nonprofit organization is not registered with the Department of Revenue because it is exempt, the organization must register and obtain a Louisiana tax identification number and file the tax return to claim the credit.
To find your local R&R, click here. To find out who to contact about the tax credit at your local R&R, click here.
For additional information, see the Louisiana Department of Revenue and scroll down the page to find information on tax credit #5 (don't click the link at the top of the page) or see the Louisiana Department of Education's Frequently Asked Questions.
Tips for Filing this Credit
Make sure to provide with the return:
An acknowledgement letter or signed receipt from the Child Care Resource & Referral Agency;
A copy of the canceled check; and
If you do a flow through for an individual—a copy of the K-1 or schedule from the entity that flow came from and how it is allocated (The K-1 is a statement that the explains the taxpayer is a member of that LLC and the allocation).
Individuals and corporations can file as soon as February or March. On the Louisiana State Return, individuals should file Schedule F as such:
Credit Description: School Readiness & Resource Referral Agency
Credit Code: 68F
Add the amount you are claiming
Refund turnaround time is generally less than 90 days, if you have all documentation.
For additional information, please contact Natasha Hayes at the Louisiana Department of Revenue - 225.219.2524 Please discuss with your tax adviser on how to properly claim the contribution on your Louisiana state tax return.
2) Tax Credit For Business-Supported Child Care—R.S. 47:6107
Businesses that support quality child care are eligible for a refundable tax credit based on the quality rating of the child care center. Eligible support includes:
Expenses to construct, renovate, expand, or repair an eligible child care center, purchase equipment for a center, maintain or operate a center, not to exceed $50,000 in expenses per tax year;
Payments made to an eligible child care facility for child care services to support employees, not to exceed $5,000 per child per tax year; and/or
The purchase of child care slots at eligible child care facilities actually provided or reserved for children of employees, not to exceed $50,000 per tax year
This refundable credit can be taken against individual income tax, corporation income tax, or corporation franchise tax depending on the business’s entity type.
NOTE: While the above R&R tax credit is a $1 for $1 credit, this credit is only for a PERCENTAGE of the eligible expenses paid. The percentage is determined by the quality rating of the child care facility to which the expenses are related or the rating of the child care facility that the child attends.
Tips for Filing this Credit
Copies of cancelled checks and other documentation to support the amount of eligible expenses must be maintained and provided upon request.
For additional information concerning the Tax Credit For Business-Supported Child Care, see the Louisiana Department of Revenue and scroll down the page to find information on tax credit #4 (don't click the link at the top of the page) or see the Louisiana Department of Education's Frequently Asked Questions.
The Department also has released a SRTC Guidebook.