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I paid my Nanny cash can I deduct that as Dependent care?

I paid my Nanny cash/check/bank transfer for her services. It was not regular schedule and just on call basics. I paid her $1000/mo and sometimes $500/mo. In 2019, it was totaled $15000. I have two kids under 9. 

 

Can I claim this as dependent care?


Kids also went to Montessori school. $12000/per child. ($24K both)

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4 Replies

I paid my Nanny cash can I deduct that as Dependent care?

How you paid your nanny  (cash, check etc. ) is irrelevant.  But you need to have her Social Security number or Tax ID in order to claim the childcare credit.  The nanny is supposed to report her income to the IRS.  What she reports to the IRS needs to match what you claim that you paid her.  Did you establish an agreement or understanding with the nanny before you began having her take care of your children?  Does she know you will claim the childcare credit?  The law is the law---but surprising her with the news that you are putting this on your tax return would not be very nice.  And....was the childcare provided in your home or in her home?  If she came to your home she may be considered to be a household employee and you may have to issue a W-2 to her and pay the employer portion of Social Security and Medicare.

 

https://ttlc.intuit.com/community/tax-topics/help/who-is-considered-a-household-employee/00/26770

 

https://ttlc.intuit.com/community/forms/help/do-i-need-to-file-irs-schedule-h/00/25742

 

As for the private schools your children attended:

 

EDUCATION EXPENSES

Education expenses for grades K-12 are not deductible on your Federal return, whether for private, public, or home schooling, nor are the expenses for tutoring, after school lessons or after school activities, such as dance lessons, sports, etc.  Some states allow deductions/credits for K-12 education and/or home schooling expenses; if your state has these deductions available, you will be prompted to enter them when you prepare your state return.  (As far as I know, the states that offer any sort of K-12 deductions/credits are Illinois, Indiana, Iowa,Louisiana, Minnesota, and Wisconsin)

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
rjs
Level 15
Level 15

I paid my Nanny cash can I deduct that as Dependent care?

The child and dependent care credit is a credit, not a deduction. A credit is subtracted from your tax, so it increases your refund or reduces your tax due by the amount of the credit. You will get the maximum credit if your expenses for two children are $6,000. Expenses over $6,000 will not increase your credit. The credit is a percentage of the expenses (up to the $6,000 maximum). The percentage is on a sliding scale from 20% to 35%, depending on your Adjusted Gross Income (AGI). The higher your income, the lower the percentage is. If your AGI is over $43,000 you get 20%, so your maximum credit would be $1,200 (20% of $6,000).

 

I paid my Nanny cash can I deduct that as Dependent care?

You did not actually mention if you had the nanny provide childcare so that you could work.  The child and dependent care credit is only for childcare that you paid for in order to work.  

 

https://ttlc.intuit.com/questions/1900643-what-is-the-child-and-dependent-care-credit

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

I paid my Nanny cash can I deduct that as Dependent care?

If you paid for care in the provider's home, she is an independent contractor.  She is responsible for her own income taxes, but to claim the expenses, you need her tax ID number.  You need to download and give her a W-10 form that she fills out and returns to you.  You include her tax number on your tax return to claim the credit.

https://www.irs.gov/pub/irs-pdf/fw10.pdf

 

If she refuses, you can try and claim the credit by writing "refused" in the space for the provider's tax number on form 2441, and include a written statement giving her name and address and that she refused to sign a form W-10.

 

If you paid for care that was provided in your home, then the caregiver is your household employee.  You must get her social security number and issue her a W-2 for the wages you paid.  You must also pay household employee's tax on your tax return.

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