Does the write off only apply to licenced daycare providers?
2007-10-04 07:04:40 · 7 answers · asked by Viennacardinal 3 in Business & Finance ➔ Taxes ➔ United States
You can still get the credit whether they are licensed or not. The provider has to claim what you pay them as income on their return.
There are a few rules though if the provider is family in order for you to be able to deduct it. The provider can't be the other parent of the child, or a dependent of yours.
2007-10-04 10:48:34 · answer #1 · answered by Judy 7 · 0⤊ 0⤋
The daycare provider does not have to be licensed for you to take the Dependent Care Credit. There are limitations on hiring a relative.
In particular, you cannot hire your spouse, the parent of the child being cared for, or a person whom you can claim as a dependent. If you hire your older child to care for the younger child, that older child cannot qualify as your dependent and also must be at least 19.
The non-licensed daycare provider will not be able to take a deduction for business use of home. Only licensed providers can take that deduction.
2007-10-04 07:17:16 · answer #2 · answered by ninasgramma 7 · 0⤊ 0⤋
You do not get the child care credit if that's what you meant.
The family member might qualify as your dependent, in which case you would get the exemption, but that has nothing to do with whether you use the person as a daycare provider.
Also, (1) if you pay someone to provide daycare in your home, they are a household employee and you are supposed to withhold taxes and to pay social security and medicare taxes on what you pay them and (2) if they are providing the daycare elsewhere (including their home), they are supposed to be filing the appropriate tax forms for their "business" profits, even if they are unlicensed.
2007-10-04 08:14:32 · answer #3 · answered by StephenWeinstein 7 · 0⤊ 2⤋
Can't be a spouse, parent of the dependent, or your dependent. If it's another child they must be 19 or older. See the instructions for form 2441 at the following IRS link (#4 on the left on page 2)
http://www.irs.gov/pub/irs-pdf/i2441.pdf
In order to take the deduction you need their social security number. They will also be expected to report the income on their tax return. If they perform the services in your home, you may have to pay employment pay taxes, see Household Employees: http://www.irs.gov/publications/p926/ar02.html#d0e95
2007-10-04 09:57:59 · answer #4 · answered by Dee 4 · 2⤊ 0⤋
Bostonian and Jessie are correct. I would like to add that if the daycare provider earns more than $400 they will be subject to self employment tax as well as income tax.
2007-10-04 07:19:29 · answer #5 · answered by Mark S 5 · 0⤊ 1⤋
yes you can use it as a write-off. Make sure that the person is aware that you are going to declare what you are paying because they will have to declare it themselves as well at year end. make sure you give them receipts for the services they provide. hope this helps.
2007-10-04 07:09:26 · answer #6 · answered by Anonymous · 0⤊ 2⤋
You may use anyone you wish as long as they are not listed as a dependent on your tax return themselves.
2007-10-04 07:08:08 · answer #7 · answered by Bostonian In MO 7 · 2⤊ 2⤋
check the IRS website, but probably so, if you have receipts
2007-10-04 07:07:27 · answer #8 · answered by cutie420311 3 · 0⤊ 3⤋