Need to know how to handle Flex account reimbursement and Paid-Under-The-Table babysitter...?

Question

I have a full time babysitter who I pay cash for, "under the table". We want to be able to get a flex account reimbursement for the child care costs. Will it be a problem that she doesn't file taxes? What sort of form do I need to submit as a receipt?

To the second responder: Cheaper child care is the reason.

Answer 1

You are on very thin ice if you try to claim a tax benefit for expenses that income tax is being evaded on.

If the person is babysitting in your home, she is your employee, and not only is she evading tax, you are also evading your responsibilities regarding employer taxes.

I am fully aware, as is the IRS I'm sure, that a lot of tax evasion goes on regarding babysitting income. The answer if you and your babysitter want to do things legally is to pay the taxes. You mention the cheaper child care when it's illegally under the table. If you plan to go on that, at least don't get greedy and try to have it both ways.

Answer 2

Since you've decided to break the law you can neither use your Flex account to pay the baby sitter nor can you claim the Dependent Care Credit if you have to pay for childcare in order to work. Why you would give her a tax break like that at YOUR expense escapes me, but it's your money.

Answer 3

To use the FSA for babysitting costs, you must be paying the babysitter over-the-table.

Answer 4

If you paid her under the table and you say you paid for babysitting you have to use her SS # in order to claim that on your taxes and then she would have to claim that money on her taxes.