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Internal Revenue Code of 1986

The official collection of tax laws in the United States.

Taxable year

The annual accounting period used for keeping records and reporting income and expenses for tax purposes, typically a calendar year for individuals or a fiscal year for businesses.

Tax credit

A direct reduction in the amount of income tax a person or company owes, calculated dollar-for-dollar.

Qualified child care wages

Wages paid to employees who work at eligible child care facilities and directly provide child care services.

Eligible child care facility

A facility that provides care for at least 6 children, charges a fee for these services, and follows all relevant state and local laws and regulations.

Rural area

Any geographic area that is not considered an urban area under federal definitions, typically characterized by lower population density.

Elective payment

An option for certain entities (such as non-profits or those with little or no tax liability) to receive the value of a tax credit as a direct cash payment from the government, rather than solely using it to offset taxes owed.