CIT-3: CIT-3 Corporate Child Care Credit (2024)
New Mexico · New Mexico TRD · Used for tax years 2024
New Mexico Form CIT-3 is used by corporations to calculate and claim the corporate child care credit. It reports child care expenses or facility operating costs, available credit carryforwards, and the credit applied to the current year's return.
Who files this form
Form CIT-3 is for corporations claiming the corporate-supported child care credit. A corporation may qualify if it:
- Pays for child care services in New Mexico for employees’ dependent children during the employees’ work hours.
- Operates an eligible child care facility in New Mexico, either alone or with other corporations.
An eligible corporation-operated facility must be used primarily by employees’ dependent children during employees’ work hours, be licensed under the Public Health Act, and operate on a nonprofit basis.
For this credit, dependent children must be under age 12 and qualify as the employee’s dependents under Internal Revenue Code Section 152.
What you'll need
To claim the credit, include:
- A completed Form CIT-3 with the corporate income and franchise tax return or S corporate income and franchise tax return.
- Schedule CIT-CR or S-Corp-CR.
- Schedule A if two or more corporations share the cost of operating the facility.
- Schedule B if claiming unused credits carried forward from prior years.
Have the corporation’s name, FEIN, and New Mexico business tax identification number ready. Facility operators also need the facility’s name and address, net operating costs, total number of children served, and number of the corporation’s employees’ dependents served.
Corporations paying for child care services need the expenses incurred and paid, reduced by reimbursements and receipts from employees. For carryforwards, use prior-year CIT-3 credit amounts and the amounts already applied to tax liabilities.
How to file
- Enter the corporation’s identifying information at the top of CIT-3. If operating a facility, enter its name and address.
- Complete Sections I and II if operating an eligible facility, Section III if paying for qualifying child care services, or Sections I through III if doing both.
- Complete Schedule A for shared facility costs and Schedule B for any available carryforward credits.
- Complete Section IV, lines 13 through 15. All corporations claiming the credit must complete these lines.
- Attach CIT-3 and Schedule CIT-CR or S-Corp-CR to the corporate income and franchise tax return or S corporate income and franchise tax return for the year the expenses were incurred.
Mail the return and attachments to:
New Mexico Taxation and Revenue Department
P.O. Box 25127
Santa Fe, NM 87504-5127
Common mistakes
- Leaving out CIT-3. The form warns that failing to attach it to the New Mexico corporate income tax return will result in denial of the credit.
- Exceeding the line 15 limit. The total credit applied cannot exceed $30,000 or the New Mexico income tax reported on CIT-1 or S-Corp.
- Including expired carryforwards. Schedule B says not to enter credits that are no longer available. Unused credits may be carried forward for only three years following the tax year the expenses were incurred.
- Using credits in the wrong order. Apply approved credits based on current-year expenses first. If those credits are less than the year’s corporate income tax liability, apply available carryforwards, oldest first.
Questions people ask
How is the credit calculated when a corporation pays for child care?
Enter the child care expenses incurred and paid, net of reimbursements and receipts from employees, on line 11. Line 12 is 30% of that amount or $30,000, whichever is less.
How is the credit calculated for a corporation-operated facility?
Divide the corporation’s net operating cost by the total number of children served, including non-employees’ children. Multiply that result by the number of the corporation’s employees’ dependents served. Line 10 is 30% of that amount or $30,000, whichever is less. Net operating cost excludes fees collected, federal tax credits related to the facility or its operation, and other payments or reimbursements, but not this child care credit.
Can corporations share a facility and each claim a credit?
Yes. Each corporation may claim a credit based on its share of the operating cost. Complete and attach Schedule A to identify the other corporations sharing the cost.
Can unused credits be carried forward?
Yes. Unused credits may be carried forward for three consecutive years after the tax year the expenses were incurred. Complete Schedule B and enter its total on line 13.
Where can I get help claiming the credit?
Call the New Mexico Taxation and Revenue Department at (505) 827-0792 or email BusinessCredit.Mgr@state.nm.us.