My spouse and I both work and are eligible for the child and dependent care credit. Can I include my 5 year-old son's private kindergarten tuition as a qualified expense on Form 2441, Child and Dependent Care Expenses?

Answer:

No, tuition for kindergarten isn't a qualifying expense for the child and dependent care credit because expenses to attend kindergarten or a higher grade aren't expenses for the child's care.

However, the expense for a before- or after-school care program of a child in kindergarten or a higher grade may qualify, even though the expense of school tuition doesn't qualify.

Why does my Form W-2 report a benefit of $3,000 in box 10 when my employer set aside $3,000 in wages for dependent care under a dependent care assistance plan?

Answer:

When you choose to participate in a dependent care assistance program through your employer, your employer has to report that value in box 10 of your Form W-2. This type of plan is a voluntary agreement to reduce your salary in return for an employer-provided fringe benefit.

You're receiving a tax benefit because under the plan, you're not paying taxes on the money set aside to pay for the dependent care.

You must complete and attach Form 2441, Child and Dependent Care Expenses, to your tax return.

Additional Information:

My babysitter refused to provide me with her social security number. Can I still claim the amount I paid her for childcare while I worked? If so, how do I claim these childcare expenses on my tax return?

Answer:

Yes, you can still claim the child and dependent care credit when you're missing the provider's social security number or other taxpayer identification number by demonstrating due diligence in attempting to secure this information.

Claim the childcare expenses on Form 2441, Child and Dependent Care Expenses, and provide the care provider's information you have available (such as name and address). Write "See Attached Statement" in the columns missing information. Explain on the attached statement that you requested the provider's identifying number, but the provider didn't give it to you. This statement supports use of due diligence in trying to secure the identifying information for the claim.

I'm thinking of having a family member babysit for my two-year old child while I work. Can I claim this cost as a childcare expense even though my family member isn't a registered daycare provider? Who's responsible for paying employment taxes on the money I pay for this care?

Answer:

These payments may be qualified childcare expenses if the family member babysitting isn't your spouse, the parent of the child, your dependent, or your child under age 19, and if you otherwise qualify to claim the child and dependent care credit.

Who's responsible for taxes on these payments depends on whether your family member is your employee or is self-employed (an independent contractor).

  • See Publication 15-A, Employer's Supplemental Tax Guide, for a general discussion of how to determine whether an individual who is performing services for you is an employee or an independent contractor.
  • Special rules apply to family employees generally, and to family employees who perform household work (including babysitting) in your home. For more information on these rules, see Publication 15, (Circular E), Employer's Tax Guide, and Publication 926, Household Employer's Tax Guide.
  • If your family member is your employee and no exceptions apply, then you're generally responsible for withholding and paying employment taxes.
  • If your family member isn't your employee, then the family member will be responsible for paying income taxes and any applicable self-employment taxes on the income earned.

Additional Information:

Do daycare payments for an elderly person qualify for the child and dependent care credit?

Answer:

Daycare payments for an elderly person may qualify as dependent care expenses if the person is incapable of self-care, lives with you for more than one-half of the tax year, and is either your spouse or a dependent. Additional requirements apply if the services are provided outside your household.

Additional Information: