Paying mother for childcare

Forum|Forum|7 years ago
June 1, 2019
11 replies
110 views

I am paying my mother 250 $ / week to baby sit my daughter and also to help my wife at home ( it is hard to give her the money but I feel better this way ). This makes her income of around 12000 $ / year.
Can i claim that as a "child care credit" when I do my taxes ? Do I have to file her taxes such as Social security, Medicare etc ? How can I do that ?

Also does she have to file taxes on her income ? how can she do that ?

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Best answer by DoninGA

The arrangement that you have with your mom would indicate that she is an independent contractor and not an employee. So if not an employee you do not have to provide her with a W-2 or pay any taxes for SS or Medicare for her.
She uses her own records to report the cash income and any expenses.
When she pays the Self Employment taxes for her net income on a Federal tax return, that pays for both the employer portion and the employee portion of SS and Medicare.

DoninGA

Level 15

Does your wife also work and have an earned income? If not you cannot claim the child care deduction/credit unless she is a student or unable to care for herself.
Your mom would report the income on Form 1040 Schedule C as self employment income. She would also deduct any expenses she incurs for the child care she provides. She may have to pay income taxes on the income and also Self Employment taxes on the net income from the self employment.

shanijavAuthor

Level 2

Thank you for responding.
No, My wife does not work at present.
So my mom can report her income and pay taxes by herself when it comes to filling the taxes ?
Also do I have to give her a W 2 or pay for any of her taxes like SS, medicare etc ? She comes to my place to baby sit and on some days we drop the baby to her house. ( she lives with my brother ).
I pay her cash.
I am a new parent and have zero knowledge about taxes so asking so many questions.
Any other things that I need to do on my end ?

shanijavAuthor

Level 2

ohh ok. sounds good. Thanks a lot for your help..!!!

DoninGA

Answer

Level 15

TaxGuyBill

Level 13

A couple of other thoughts:

Because your wife does not work, you do not qualify for the Child Care Credit (unless your wife is a full-time student or disabled enough that she can not care for herself.

It would actually result in less taxes if your mother ONLY came to your home, and you did NOT drop the child off at her home. That would probably make her a "Household Employee", but as your parent watching your child she would be exempt from Social Security and Medicare taxes.

On the other hand, it may be better to continue this arrangement so she builds up "credits" with Social Security, and that would qualify her for Social Security when she is old enough and/or increase the amount of Social Security payments that she receives.