@Unclesamlovesyou wrote:
Ok ok. Follow up question: is it worth it to do that if she’s going to have to pay taxes on the $5k? I shave $5k off of my income and then pay taxes on $5k later.. my girlfriend doesn’t have any other source of income. I suppose that I’m paying taxes on the $5k at a much lower bracket. Or do you even pay taxes if you only make $5k???
Sorry, the parent of the child can never be a qualified care provider for the child care credit or the FSA benefit. See for example, the instructions for form 2441 on page 3,
https://www.irs.gov/pub/irs-pdf/i2441.pdf
You can take the credit or the exclusion if all five of the following apply.
-
Your filing status may be single, head of household, qualifying widow(er) with dependent child, or married filing jointly. If your filing status is married filing separately, see Married Persons Filing Separately, later.
-
The care was provided so you (and your spouse if filing jointly) could work or look for work. However, if you didn't find a job and have no earned income for the year, you can't take the credit or the exclusion. But if you or your spouse was a full-time student or disabled, see the instructions for lines 4 and 5, later.
-
The care must be for one or more qualifying persons. See Qualifying Person(s), earlier.
-
The person who provided the care wasn't your spouse, the parent of your qualifying child, or a person whom you can claim as a dependent. If your child (including stepchild or foster child) provided the care, he or she must have been age 19 or older by the end of 2021, and he or she can't be your dependent.
-
You report the required information about the care provider on line 1 and, if taking the credit, the information about the qualifying person on line 2.
