How much can I pay someone for daycare before they have to claim it on their taxes?

Question

I am enrolled in a cafeteria plan for daycare. When my regular lady is gone, I have my Mother-In-Law watch my boy and pay her. How much can I pay her for before she has to claim it on her taxes?

Answer 1

Assuming that she has other income she must claim ALL of the money you pay her. Even if she has no income herself, if she files a joint return with her husband then all of it must be claimed.

If she does not file a joint return and has NO other income she will have to file a tax return if she has $400 or more in self-employment income in any tax year.

For you to take the Child & Dependent Care Credit you must provied the name and Tax ID (SSN in this case) of the provider. Therefore the IRS will already know about the money paid to her. Even if you did not take the credit, she would still be legally obligated to claim the income.

Please ignore the people who mentioned $600. They don't know what they're talking about and are confusing the filing requirement for Form 1099 with the requirement to claim all income received. You won't be filing a Form 1099 regardless of the amount you pay so that's really a moot point.

Answer 2

You can pay her up to $600. But, keep in mind that if you don't send her a 1099 and have her claim it as income on her taxes, then you can't write it off as a daycare expense on yours.

Answer 3

Under $400 if she doesn't have other income. If she has other income and already has to file, then she would have to claim whatever you pay her from the first dollar.

If her only other income is social security, then $400.

Answer 4

Maybe she would consider claiming a small business? If she would be interested in claiming her expenses.

Answer 5

$600 however, if you do not claim it on your taxes then you lose on the income tax credit.