Do I have to Report Income Tax for Shared Expenses?

[ib012]

I live with my girlfriend and we have a baby. Up till now I was the only one who had a job but recently she got a job as well so we decided to hire a babysitter. The plan is for her to send me money through a payment app like Zelle each month to pay for living expenses such as the babysitter, rent, food, etc. The thing is she will be sending quite a bit of money regularly each month for this (over 2k or more). Do I have to pay any taxes on this money if it is to pay bills and primarily to share living expenses? I will be paying most of of the bills from my checking account including the babysitter. I plan to be HoH as I am the higher earner for now and receive Child Credit deductions for paying the babysitter if I can? From what I read, since this is contributing to shared living expenses, I do not have to pay taxes but I wanted to be sure?

[Bsch4477]

You are correct that you are sharing expenses and there are no tax consequences. If you provide more than half of the upkeep for your home you can file as head of household. You can also claim child care credit if otherwise eligible. 

[Hal_Al]

 If you and the other parent live together, either one of you (but not both) may claim the child. You may decide between you which one will claim the child. Only if you can’t agree, do the IRS tie breaker rules apply (higher AGI), to see who has first choice. It may be worthwhile to prepare trial returns, both ways,  to see which way the family comes out best. This tool may be useful: https://turbotax.intuit.com/tax-tools/calculators/taxcaster/?s=1.

To use Head of Household (HOH) filing status, you must be the one claiming the dependent and the one paying most of the household expenses (you can't split the expenses exactly 50-50). 

For calculating the dependent care credit (DCC), you may not count the money she reimburses you for baby sitting. Only the parent claiming the dependent can claim the DCC.   Baby sitting expenses are not part of household expenses when determining eligibility for HOH filing status.  

[ib012]

1) We already agree that I will claim the child as a dependent, so no disagreement.

2) Now lets say for Example I make $5000 and she gives me $3000 every month, and we spend a total of $7000 each month for our living expenses such as babysitter, rent, food, etc. then I will be spending $4000 so I will still maintain head of household from what I understand, right (her $3000 vs my $4000)? My only question is do I have to pay taxes about the $3000 she will Zelle me each month somehow? And can I claim some child care credit at the end of the year filing taxes?

[Bsch4477]

You have already been told that there are no tax consequences for the money she gives you. If you have child care expenses required to allow both of you to work claim the child care credit under deductions/credits. You can also get child tax credit and earned income credit if otherwise qualified. Yes, you file HOH if you provide more than half of the upkeep of the home. She would file as single. 

[Hal_Al]

Q. My only question is do I have to pay taxes about the $3000 she will Zelle me each month somehow?

A. No.

Q. And can I claim some child care credit at the end of the year filing taxes?

A. Yes, since you are claiming the child as a dependent and the child lives with you. Your girlfriend cannot claim the dependent care credit, based on the portion she pays. 

Q. Now lets say for Example I make $5000 and she gives me $3000 every month, and we spend a total of $7000 each month for our living expenses such as babysitter, rent, food, etc. then I will be spending $4000 so I will still maintain head of household from what I understand, right (her $3000 vs my $4000)?

A. No. Not based on those numbers, because the babysitter cost is not part of "the cost of maintaining a qualifying household".   Include in the cost of keeping up a home expenses, such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home. 

References:

https://turbotax.intuit.com/tax-tips/family/guide-to-filing-taxes-as-head-of-household/L4Nx6DYu9

https://www.irs.gov/pub/irs-pdf/p17.pdf  page 24