I have a question concerning child care and taxes. I currently am enrolled in the dependent care via my employer. Our initial thoughts were to have my mother (66 years old) watch our new baby and use the dependant care to pay for this because of the tax benefits. Since enrolling and everything my mother has informed me that she is now worried that this income $4000 (her only income) may cause a reduction in her VA benefits that she receives.
My question is how much at risk are we if she doesn’t file taxes for next year – could this result in some outrageous back taxes she would be required to pay?
2007-02-27 10:01:36 · 3 answers · asked by pramos67 2 in Business & Finance ➔ Taxes ➔ United States
She doesn't get social security or a pension? Or interest income? Does she normally not file a return?
It is fraud for her not to report the income. It's a very dangerous game. I don't know anything about VA benefits, but if she will lose them, then instead, she should watch your kids for free and you can give her a gift of $1,000 now and then to thank her. Then you don't deduct the gift and she doesn't claim the income.
If you process it thru your employer, there is an excellent paper trail for her to get into trouble.
2007-02-27 10:13:07 · answer #1 · answered by LC 2 · 0⤊ 0⤋
The best thing would be for you to take action and call the VA. Tell them that she has been offered a job making 4K a year and ask them to tell her, in writing, take names of those you talk to, and tell her how it would affect her benefits. I'm thinking it would not affect them at all but government rules change all the time. Most of the time the people who answer questions at the VA are veteran volunteers and are sympathetic. Just make sure you get stuff in writing because you know how it goes with the government, even then you can only reasonably be sure of getting what they promise you.
2007-02-27 18:12:28 · answer #2 · answered by ZenWoman 4 · 0⤊ 0⤋
If you pay her for child care, to take the child care credit you'll have to show her social security number. If she doesn't file a tax return reporting it, then yes at some point she'll hear from the IRS, probably just with a bill for the back taxes, penalties and interest.
2007-02-27 21:48:54 · answer #3 · answered by Judy 7 · 0⤊ 0⤋