File your babysitter on your taxes?

Question

Hello,
Is it worth filling what you pay your babysitter on your taxes? Do you get all the money back?
Thanks!!!

Answer 1

When you pay a babysitter (who is not your spouse, parent of the child, dependent, or one of your children under 19) or a child care center to watch your dependent children who are under 13 because you work or are going to school or are looking for work, then the amount you pay may give you a credit on your tax return called a Child Tax Credit. If you are married and your spouse doesn't work, then you won't get the credit.

The amount of credit depends on how many children, how much you paid, your tax liability, and your adjusted gross income. You definitely don't "get all the money back", but you can get a substantial amount back. It never hurts to apply for the credit.

One big thing you need is the name of the care provider, their SSN or EIN (if they are a business), and their address. You can still file for the credit if they refuse to give you their SSN, but it is much easier if you get their SSN. Why do you need all of this? Whatever you tell the IRS you paid the babysitter, the babysitter will have to claim as income on their return. If their numbers they report to the IRS are different than what you report, the IRS will send out letters asking for the correct number. It is for this reason that many of my clients refuse to report the payments. That is unfortunately because regardless if you tell the IRS you paid someone for daycare, it is the responsibility for the baby sitter to claim the income. Not doing so is fraud. Tax avoidance on your "first job" is not a good way to start a life. Besides, depending on other factors in the babysitter's life, their tax burden may be very low. The income, in some cases, may actually qualify them for so much tax credit that they not only end up not owing the IRS any money, they get money back from the IRS. Why? If they have children of their own, the Earned Income Credit can more than offset SE taxes and income taxes.

Bottom line is, go ahead and claim the credit. Make sure your baby sitter knows what you are doing and make sure they know that they may need to claim that income on their own return. They may not have to file if the amount is small, but that is their concern, not your.

Good luck!

Answer 2

The amount of credit you receive for child care depends on a number of factor that you have not provided. In some cases the benefit for the state income tax is far greater and refundable. You must supply a Social Security number or EIN for the person providing the service and the address where the child care occurred. The provider will need to claim that income also.

Answer 3

When you say "babysitter" do you mean child/dependent care, that allows you to work? Certain rules apply to child care costs (and to a certain extent) are deductible from taxes.

If you are referring to a babysitter that watches your child so you can go out on certain occasions, this is generally not deductible; however, you may be able to file a Schedule H, "Household Employment Form" if you paid more than $1,400.

Answer 4

Keep in mind that you should be giving your babysitter a W-2. There is also withholding, social security, medicare and unemployment tax issues depending your babysitter's age. See Schedule H for details.......
---------
Note To "Diamonds_4Ever": If your family is paying you from a business account and deducting your pay from their business income, they are committing fraud.

Answer 5

I don't think there is a line for babysitter on the tax form. If you are claiming as business expense, that will be different.

Answer 6

If you pay for child care so that you can work or attend school then you can get a tax credit by using form 2441. Just for going to movies or yaddah, no.

Answer 7

I baby-sit for long hours for a family that runs their own business (I'm talking up to 20 hours in a day when they are working). They always pay me from their business account, I'm sure it cannot hurt.

Answer 8

Always.