1. 1. A deduction for a member of a household who is an employed caretaker relative may be made for the cost of necessary care of a child or incapacitated adult who is a member of the household, living in the home, and receiving assistance.

2. 2. The deduction may not be made for the cost of dependent care provided by the caretaker relative's child or stepchild who is under twenty-one years of age, unless:

1. a. The provider of dependent care does not live in the home occupied by the household;

2. b. The provider of dependent care is at least eighteen years of age;

3. c. The provider of dependent care was not claimed as a dependent on the most recent federal income tax return filed by the caretaker relative;

4. d. A bona fide relationship of employer and employee exists between the caretaker relative and the provider of dependent care; and

5. e. The provider of dependent care is not a member of the caretaker relative's household.

3. 3. The deduction may not be made for the cost of dependent care provided to a child by that child's stepparent who lives in the home occupied by the household or by the child's natural or adoptive parent.

4. 4. The deduction is for the actual out-of-pocket cost of care. The deduction must be verifiable and made with the caretaker relative's own funds and is not subject to reimbursement.

History: Effective December 9, 1996; amended effective July 1, 1997; January 1, 2003; January 1, 2011; April 1, 2026.