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Can I deduct Payroll service fees for Nanny (householf employee)?

I use a payroll service for our part time nanny.  The service charges a very reasonable $45 per month.  Am I allowed to include this as part of my expenses for the childcare credit?  If so, where?

For instance, in Form 2441, part 1, section 1, I list the nanny's name and SSN, but here it seems best to include only her actual wages.  I could make another entry in this section for the payroll service, but I don't have their EIN?

 

Also, for the record, its seems like TurboTax should auto calculate the totals in Section 2 (a) based on Section 1.  For example, when I went back and added another expense in section 1, and because it didn't increase the amount in section 2, I almost missed seeing that and would have missed out on actually getting the credit for that expense.

 

Additionally, for the record, it seems like TurboTax should have calculated or at least prompted me in the step-by-step to input the 7.65% employment taxes in Section 2, question B, knowing already that I was paying these taxes in Schedule H.  Instead I had to find this thread and go insert it myself in the Form (https://ttlc.intuit.com/community/tax-credits-deductions/discussion/nanny-taxes/00/2741220).

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2 Replies

Can I deduct Payroll service fees for Nanny (householf employee)?

Can I include the fees?

No.  That would normally be a miscellaneous itemized deduction subject to the 2% rule, but the 2017 tax reform law eliminated that deduction for 2018-2025.  You report the gross wages, before any deductions for the nanny tax, but not including service charges from your payroll processor.

 

I don't understand the rest of your question, the sections you are asking about don't seem to match either schedule H or form 2441.  When completing the child care credit, you are expected to know the amounts you paid for the caregiver.  Turbotax doesn't link form 2441 and schedule H because you might have more than one household employee, or your employee may provide more services than child care (which would not be eligible for the credit), so Turbotax can't assume that 100% of your schedule H wages are applicable to child care. 

Can I deduct Payroll service fees for Nanny (householf employee)?

Thanks so much!  This answers my question(s) perfectly. 

 

My second question had been about the 2441 form but I see your point about not linking them.

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