Friday, July 16, 2010

How can I deduct child care expenses if I paid them cash?

I paid them cash to take care of my son. They don't have a license and don't want to give me their SSN#. Is there anyway that I can deduct child care expenses and how? Thank you

How can I deduct child care expenses if I paid them cash?
the only way you could is if you have receipts for every time you made a payment to them and they provided you a receipt for the payment
Reply:While it is best if you have receipts or canceled checks to prove your expenses, it is not necessary and the method of payment is irrelevant. If you have paid the same amount to the same person for the entire year it is pretty easy to calculate your total costs, but going forward, you should keep a spreadsheet or just a little notebook where you write the day you paid, the amount and the person you paid it to, each time you pay them, just in case you are every audited.





For this year, all you need is the name address, and social security or tax ID number of the person that you paid the fees to and some written calculation of the fees paid so you know how much to claim (a tax preparer will want to see something written for you to take the credit, if you are doing them yourself through the www.IRS.gov Free File program it may be easier).





You should be aware that the IRS tracks the credits taken for child care and compare them to the returns of the person that the money was paid to. However, that person may not be required to file a return to claim that income if all of the following are true:


*your child care money is that persons ONLY income


*the amount that you paid does not exceed the standard


deduction and the personal exemption amounts combined


($5,350 + 3,400 respectively)


*the person you paid files single and claims themselves or


*the combined income of persons they file jointly with meets


the income limits above.





I hope this helps, but post a follow-up if you have more questions.
Reply:you report the persons name...adress...and ssn on the dependant care form. you must have the ssn.. If they don't cooperate you can report them to the irs.


No comments:

Post a Comment