We paid grandma to care for 3 qualifying children under age 13. Do we qualify for a credit?

[emilkostov]

We paid her around $10K cash for the year of 2016. Do we have to fill up for her W-10 and form 2441 and then file our taxes in order to receive credit and how the whole procedure would work? Thanks.

[AndreaG · Accepted solution]

Yes. Since your children are under the age of 13 and you are paying expenses for their care, you will qualify for the credit as long as you meet all of the requirements. Additionally, your grandmother would need to fill out the W-10 form or she can prepare a letter that identifies her name, address, and taxpayer identification number. Please refer to page 9 of Pub 503 under the headings, "care provider identification test", "information needed", and "getting the information", for additional clarification. https://www.irs.gov/pub/irs-pdf/p503.pdf

Please refer to the following Turbo Tax FAQs to determine if you meet all of the requirements to claim this credit. https://ttlc.intuit.com/replies/3301418   https://ttlc.intuit.com/replies/4483662

Please refer to the following Turbo Tax FAQ for instructions on how to enter this information into Turbo Tax, in order to claim the credit. https://ttlc.intuit.com/replies/4395614

[emilkostov]

So, just W-10 attached to our files and no need of form 2441?

[AndreaG]

The form 2441 is the form that you file to claim the credit. when you enter your information into Turbo Tax, Turbo Tax will complete this form for you.

[AndreaG]

The Form W-10 is for your records only. You dont need to send it to the IRS

[emilkostov]

Really helpful info. Thank you very much for your time and patience.

[emilkostov]

I wonder now, what happens next? Is IRS going to send us(her) a bill that she owes money to them and if so how much that will be approx.?

[AndreaG]

it depends on whether she is required to file a tax return. Did she file a tax return? This FAQ identifies the filing requirements. <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/replies/3302274">https://ttlc.intuit.com/replies/3302274</a>

[emilkostov]

She did not file nor received any kind of a tax forms/letters. From the posted link from above, I'd like to add...She is single, 62y/o and luckily (for us) the mentioned income was less than $10,350. Now, if we add her to our file as a relative who took care of our children, how that will affect her? Is she going to owe money to IRS, are they going to legally pursue anything, like sending her bills and etc. and is she gong to be obligated to them? I am a bit confused from this part stated here..

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/1901490-do-i-need-to-file-a-federal-return-this-year?jump_to=answe...>

"Also you need to file if you had at least $400 in net earnings from self-employment (income minus expenses)  or you had marketplace health insurance and received advanced payments for the premium tax credit."

I do really appreciate all your help in advance. Thank you once again.

[emilkostov]

I'm sorry, I don't wanna sound rude bumping it, but can someone help find out the answer on my last question in here, please. Thank you so much.