For you who have in-home caregivers, do you claim it on your taxes? What do you pay/hour? We are hiring a women for 10 hours/week to watch our one 9 month old son. Do we claim it on our taxes? If so, she wants a higher rate of pay since she'll have to report it. If we don't claim it, she's willing to take a lesser hourly rate. Advice?
She is not licensed. If I claim it, she would report it. That's what she said when she brought this up. I appreciate that she brought it up ... I hadn't even thought about it!
Lots of people do it under the table but it is illegal and really should be claimed. I think it's more up to her if she wants to claim it or not because she is the one who will get in more "trouble" for not claiming. It's a lot of headache to claim and cuts the pay they get so that is why most don't want to do it.
Hi Kristen,
well, you're opening a can of worms with that one hee hee.
Most of the time if you are going to report taxes they will want a higher wage because they will have to pay taxes on what they earn. However, it's illegal to pay someone and not report it to the IRS. I am pretty strict about most things. This and taking my own candy into the movies are 2 places I am just willy-nilly about not following the 'rules'.
If you report taxes, then you should also research insurance (what happens if she falls down your stairs while caring for your son?) etc. If they make above a certain amount for the year you will have to withhold and file FICO and, in addition, there are decisions you will have to make about if she is an independent contractor or an employee (which has to do with set hours and how much direction you give her about 'how' she does her job- so you should look this up).
Here is some information
http://www.irs.gov/newsroom/article/0,,id=106189,00.html
Now that I read this..... it says that you can claim an exemption of up to 3000 if you are single or 6000 for both spouses who work. that's a credit - not the amount you will get back. So, depending on your income level and where you fall in the tax bracket it may not even affect the tax you owe. I would have them figure the tax credit this year and see if it would help you or hurt you to claim it.
Just my $0.02
B.
My caregiver always took it off. Single mothers benefit a great deal from the childcare tax credit. I don't think a married couple would benefit a lot from 10 hours a week tax credit. I guess you would have to think about the price difference.
When my son was little someone watched him in her home 40 hours a week, along with a couple other kids, and wasn't licensed. But I still claimed my childcare expense with her. She also claimed my payments as income and paid taxes on them, and willingly gave me her SSN to put on my tax returns. But, my son with with her full-time.
In your situation, I would think 10 hours a week would be more like a babysitter than a childcare provider, and I don't think I'd claim that expense.
And, I agree with the other posters that the amount of credit you receive on your taxes (if you receive any!) might not be enough to warrant the extra expense she'll charge you.
I can't remember the exact numbers now, but I think I paid around $5,000 a year to my childcare provider (she only charged me $200/week) and got a credit of a few hundred dollars on my tax return.
Its not worth it to her if you claim it and you dont get much of a credit. My mother has ran an inhome day care for 25+ years and doesnt do that to her parents and keeps her rates affordable.
I do claim it on my taxes but our provider is licensed and has her own in-home daycare. Just note that you don't get a credit for the who amount you have paid, just a percentage of it. I guess to help you decide, look at the tax credit info and see if you would save more by claiming and paying the higher rate or by not claiming it at all.
I am not claiming it this year. Basically, I would only get to claim 20% of what I pay her, but she would have to claim 100% of it and pay the taxes on it. I didn't think that it was beneficial enough for me to claim the 20% when she would have to pay taxes on the whole 100% which would be much more for her than the benefit would be for me. Hope that made sense......you should maybe look into the percentage of it that you would get to claim before you make a decision. Your tax person should be able to tell you what that is. The percentage that you can claim is based on your income. The higher your income, the less percentage you get to claim.
So is she licensed?
If she is not licensed, and you claim her, to my understanding she can get in trouble. Since she would not be claiming her income on her taxes.
Do you pay her with check or cash?
She only watches your baby 10 hours a week.
You want to visit the irs site for more information and download a form 2441.
http://www.irs.gov/taxtopics/tc602.htm
As far as "licensed". I've never heard of need a license to be a babysitter or a nanny. (Day care facilities, including home care facilities need to be licensed).
