2007-08-15 18:26:12 · 6 answers · asked by c s 1 in Business & Finance ➔ Taxes ➔ United States
If she is babysitting so you can both work, then you can most likely claim a child care credit for the payments. Your mother-in-law is required to file a tax return declaring the payments as income.
2007-08-15 18:32:52 · answer #1 · answered by Judy 7 · 2⤊ 0⤋
You can hire a grandparent to babysit and use those payments for the Child and Dependent Care Credit. In order to get the credit, you have to provide the name and tax id of the care provider.
The grandparent would not have to file a tax return unless their total income put them over the limit for filing a return. However the grandparent would have to provide you with their SSN or tax id number (such as EIN), and their address.
2007-08-15 19:32:27 · answer #2 · answered by ninasgramma 7 · 0⤊ 1⤋
Babysitting payments are subject to self employment tax, so even if the grandmother is below the threshold for income tax, she may still need to pay self employment tax.
2007-08-16 04:56:36 · answer #3 · answered by Mark S 5 · 0⤊ 0⤋
ninasgramma is correct. Your credit is normally 35% of your expenses. Also your mother in law must not be claimed as dependent by you or your spouse.
2007-08-15 20:50:10 · answer #4 · answered by MukatA 6 · 0⤊ 0⤋
Judy is correct. Ignore the clown below her; he's clueless.
2007-08-15 18:37:59 · answer #5 · answered by Bostonian In MO 7 · 1⤊ 0⤋
I hope not!
This type of arrangement could be open to abuse. We'd soon be having all grandparents etc who willingly have their grandkids etc sticking their hand out & receiving a 'payment'.
2007-08-15 18:36:48 · answer #6 · answered by Anonymous · 0⤊ 3⤋