Feel confident doing your own taxes. Just answer simple questions about your life, and TurboTax Free Edition will take care of the rest. For Simple Tax Returns Only. Tax Exemptions and Deductions for Families. New Addition: Adoption Tax Credits. Child and Dependent Care Expenses. Video: Tax Filing Requirements for Children. Estimate your tax refund and where you stand Get started. See if you qualify for a third stimulus check and how much you can expect Get started.
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Skip To Main Content. OVERVIEW If you are paying someone to take care of your children or another person in your household while you work, you might be eligible for the child and dependent care credit. Benefits of the tax credit The Child and Dependent Care Credit is a tax break specifically for working people to help offset the costs associated with caring for a child or dependent with disabilities. There are two major benefits of the credit: This is a tax credit , rather than a tax deduction.
A tax deduction simply reduces the amount of income that you must pay tax on. A tax credit, however, directly reduces your taxes, dollar for dollar. That is, she will not have to pay social security and medicare tax. But the income is still subject to some income tax. View solution in original post. I also have the same question but with additional nuances. My girlfriend and I have a baby and we are paying her mother monthly for helping us take care of the child she also lives with us for this reason.
I will be claiming the child tax credit for him since i will be itemizing my returns but i wont be taking the dependent care credit since I dont want to pay social security or Medicare taxes hopefully. Will I be able to consider her as a family member grandmother of my child since shes my girlfriends mother, or will she be considered an independent contractor?
I am also wondering if I can put money into a flexible spending account with my employer to pay her with pretax.
A family member being paid for childcare should qualify as a childcare related expense right? Especially if she has to still file income taxes regardless of if I qualify for the nanny tax exemption or not. She is not a family member because she is not related to the taxpayer you , even though she is related to the child. If you and she agree to do so, she can be considered an independent contractor and pay her own FICA, in the form of self employment tax.
I am also wondering if I can put money into a flexible spending account FSA with my employer to pay her with pretax? She has to still file income taxes regardless of if you qualify for the nanny tax exemption or not you don't or whether you pay with FSA funds or not. I have a similar question. I will not be using her as a dependent on my taxes.
Why sign in to the Community? Submit a question Check your notifications Sign in to the Community or Sign in to TurboTax and start working on your taxes. Your expenses qualify even if there are less expensive or no-cost alternatives available to you. The IRS has an online questionnaire you can complete to determine if you qualify for the child and dependent care credit. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site.
The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. Tax Relief for Child Care Expenses. The child care tax credit and dependent care accounts could save you thousands of dollars. How does it work? Do your earnings limit how much can you claim?
However, there are two exceptions to this rule: The first exception applies if you or your spouse was disabled for all or part of the year—that is, not physically or mentally capable of self care. The other exception is if you or your spouse was a full-time student for at least part of five months during the year this does not include on-the-job training courses, correspondence schools, or schools offering courses only through the Internet. How to claim the child care credit Claiming the child care credit is easy.
Dependent Care Accounts A dependent care account is like the k plan of the child care world. How much can you contribute? Use it or lose it, or not Under the regular tax rules, money left over in a dependent care account at the end of the year plus 2.
How to enroll and get reimbursed If your employer sponsors a dependent care account, you'll be able to enroll during your general benefits enrollment period. Using both You can use both the child care credit and a dependent care account, but the money you contribute to your dependent care account will be subtracted from the maximum amount of child care expenses you can claim under the child care credit.
You must meet the following requirements to be eligible for either the child care credit or a dependent care account: your child must be your biological, adopted, step, or foster child your child must live with you for more than half the year time away from home for school or traveling counts your child must be younger than 13 or permanently and totally disabled if your child turns 13 during the year, you can only include those expenses you incur before his or her 13 th birthday you must pay more than half the cost of keeping up a home in which you and your child live during the year if your child has a trust fund or other income, the trust cannot provide more than half the support , and you and your spouse, if you are married must have earned income for the year subject to the exceptions noted above.
In addition to the above, your child care expenses must meet all of the following criteria: your child care provider must be someone whom you can't claim as a dependent -- this may include a licensed day care provider, preschool, or on-the-books nanny but can't include anyone you pay under the table you must report the name, address, and Social Security number or employer identification number of the care provider on your return; you can use IRS Form W, Dependent Care Provider's Identification and Certification , to request this information from the care provider.
Expenses for household services, such as housekeeping, qualify if they are at least partly for the well-being and protection of your child. Talk to a Tax Attorney Need a lawyer? Start here. Practice Area Please select Zip Code.
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