A tax credit is allowed to an employer who establishes a child care program for the benefit of his/her employees. A credit is also allowed for donations to a non-profit corporation that provides child care services to his/her employees.
A taxpayer that employs residents of South Carolina that establishes a child care program for his employees may claim as a credit against income tax, bank tax, or insurance premium tax an amount equal to 50% of his capital expenditures in this state for establishing a child care program not to exceed $100,000. The credit may not exceed 50% of the tax liability, but may be carried forward for 10 years. Allowable expenditures include mortgage or lease payments, playground and classroom equipment, kitchen appliances, cooking equipment and real property, including improvements in this state. Allowable expenditures include donations made by a taxpayer to an Internal Revenue Code Section 501(c)(3) nonprofit corporation in South Carolina that provides child care services to the taxpayer's employees. The taxpayer must specify to the nonprofit corporation that the donation is for it's child care program. If credit is taken for donations by a corporation, a deduction to arrive at the net income of the corporation is not allowed.
A taxpayer that employs residents of South Carolina is also allowed a credit for payments made by the taxpayer to operate a child care program for his employees in this state or child care payments made directly to independent child care facilities for the benefit of employees in this state. The credit may be taken against the taxpayer's income tax, bank tax, or insurance premium tax in an amount equal to 50% of the payments made, not to exceed $3,000 per employee who benefits from the program. When an employer chooses to make direct payments to a child care facility not operated by the employer, the costs incurred in the first year for administration of a direct payment program also may be included in the establishment costs of Part I, Section A. After the start-up year, administrative costs for payments to a direct payment program may be claimed as a credit not to exceed 2% of the costs. The total credit may not exceed 50% of the tax liability.
The Child Care Program and operation of the program must meet the licensing, registration, or certification standards prescribed by law.
For purposes of the credit allowed for payments made directly to an independent child care facility, the taxpayer is required to retain information concerning the child care facility's federal identification number, license or registration number, payment amount, and in whose name and for whose benefit the payments were made.
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