Am I able to deduct federal/state taxes I paid for my nanny from my own taxes? Also, do I have to report this on my own tax return despite using a payroll service?

[Coleen3 · Accepted solution]

No, you can't deduct these payment. You have paid a tax on wages so you would not pay them again. The purpose of Schedule H is to be able to include your tax liability to the IRS on your 1040 rather than having to make quarterly payments. Since you did make them, ignore the Schedule H and enter your payments following the steps below.

In order to indicate the taxes you have paid already during the year for your household employee (or others), you need to:
1. Go to "Deductions + Credits" (on the top bar)
2. Select "Estimates and Other Taxes Paid"
3. Select "Estimates"
4. Under "Estimated Tax Payments", select the first option "Federal estimated taxes for 2014 (Form 1040ES)"

[tinamisu]

Thank you, @TurboTaxColeen!!

[tinamisu]

To be clear, does that mean I only file the 1040ES (I received 4 of these) on my return and not submit the Schedule H? Sorry, I got confused again. Thank you in advance!

[Coleen3]

No, ES forms are for the upcoming (2017) year. Indicate that you paid the taxes already. Do not use Sch. H as the purpose of the form is to include the same taxes on your 2016 return.

[tjl4834]

Can I include the employer portion of payroll taxes (ie Employer FICA and Medicare along with FUTA and SUTA) ad part f my child care cost?  Are these payments deductible on my Federal Tax return?

[MaryM428]

You can claim up to $3000 for one dependent of up to $6000 for two.  

You can add up the cost of the nanny, including all of the taxes that you paid and enter that amount in your child care expenses.

Child and dependent care expenses must be work related to qualify for the credit. Expenses are considered work related only if both of the following are true.

• They allow you (and your spouse if filing jointly) to work or look for work.
• They are for a qualifying person's care.

To enter your child care expenses

1. Go to "Federal""
2. Select "Deductions & Credits"
3. Child and Dependent Care Credit
4. Select "Yes" to "Did you pay for child or dependent care in 2020?"