Child Care Credit

0512cca — Sat, 25 Jan 2025 19:14:33 GMT

I am paying to a nanny to take care of my daughter while I am working and she is going to daycare as well. I paid to her nanny $2,900 in 2024. If I include this amount to claim the Child Tax Credit, do I have to issue a W-2 or 1099-NEC to her? And she has to report this amount as income in her tax return? What happens if we don't do that? Thanks

Re: Child Care Credit

xmasbaby0 — Sat, 25 Jan 2025 19:21:57 GMT

If the nanny worked in your home, they are a "Household Employee".

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-payments/pay-taxes-pay-household-employee/L9eZxdOGo_US_en_US?uid=lrtjjefi

Re: Child Care Credit

MonikaK1 — Mon, 03 Feb 2025 18:19:35 GMT

As mentioned in this help article also cited by @xmasbaby0, if you pay a household employee cash wages of $2,700 or more for 2024, then you need to withhold and report both Social Security and Medicare taxes from their pay. This is required regardless of whether the payments qualify you for the Child and Dependent Care Credit.

You aren't required to withhold federal income taxes from your household employees' pay, but you can. If you and your employee agree to do this, IRS Publication 15 Circular E, Employer’s Tax Guide can guide you through this process.

If you must withhold and pay Social Security and Medicare taxes, or if you withhold federal income tax, you'll need to complete Form W-2, Wage and Tax Statement for each employee. You'll also need a Form W-3, Transmittal of Wage and Tax Statement. See "What Forms Must You File?" in Publication 926 for information on when and where to furnish and file these forms. To complete Form W-2, you'll need an employer identification number (EIN) and your employees' Social Security numbers. If you don't already have an EIN, you can apply for one using the online EIN application. See this IRS article for more information.

Also, you'll need to file Schedule H, Household Employment Taxes, with your individual tax return.

The Child Tax Credit is the credit you receive for claiming your child as a dependent.

If the person who provided care in your home was obtained through an agency and you made the payments to the agency, then the agency would be responsible for handling employment taxes instead.

@0512cca

topic Child Care Credit in Deductions & credits

Child Care Credit

Re: Child Care Credit

Re: Child Care Credit