Tax Deduction for a Nanny
The IRS tax code contains several rules that affect taxpayers and their nannies. To help working parents, Congress passed the Child and Dependent Care Credit. The Credit allows eligible taxpayers to write off a limited portion of their daycare costs. The IRS also requires nannies to pay self-employment taxes or withhold taxes through their employers.
Daycare or Nanny Tax Credit
Working parents may take advantage of the Child and Dependent Care Credit by claiming the credit on their tax returns using the Form 2441, Child and Dependent Care Expenses. The dependent care credit is limited to taxpayers who work and require daycare to work or actively look for work. Taxpayers may take up to a $3,000 credit for one child and $6,000 for two. Daycare expenses must be for qualified children and providers. Taxpayers must have earned income to take advantage of the daycare tax credit. Qualified daycare expenses include fees paid to nannies.
Qualified Daycare or Household Nanny Services
Taxpayers may claim the daycare credit if the taxpayer hired a qualified childcare provider or household employee to take care of their children while the taxpayers worked or tried to find employment. Household services include nannies who provide incidental housekeeping services in addition to childcare. Taxpayers may not deduct costs paid to household employees who are hired solely to provide household services, which includes chauffeurs and manual laborers.
Qualifying Child
Taxpayers may claim daycare or nanny tax credits for daycare provided to an eligible dependent younger than 13 years of age. If the taxpayer's child lived with the taxpayer for most of the year, then the taxpayer may use the credit to cover daycare expenses. However, there are special tax laws that separately cover divorced and separated taxpayers who are non-custodial parents claiming the child as a dependent under IRS Form 8332.
Withholding Nanny's Employment Taxes
Taxpayers who hire nannies to take care of their children must be sure to withhold employment taxes. Many working parents choose to pay both the employer's portion of the employment taxes and the nanny's portion to cover withholdings for Social Security, federal unemployment, Medicare and state taxes. Parents who fail to withhold the employment taxes may be required to pay an IRS penalty for failure to withhold employment taxes for household employees.
Nanny's Responsibility
Nannies are typically self-employed and must file their own taxes using the 1040 Income Tax Return Form and Schedule C, Profit or Loss From Business. Alternatively, nannies can file their taxes through the taxpayer-parents who provide the nanny with IRS Form W-4, or Employee's Withholding Allowance Certificate. Once parents provide their nanny with this tax form, the nanny completes the worksheet and returns it to the parents to file.
Considerations
Since tax laws frequently change, you should not use this information as a substitute for legal or tax advice. Seek advice through a certified accountant or tax attorney licensed to practice law in your jurisdiction.
Common Tax Deductions for Landlords - Landlords and Property ...
landlords.about.com/od/TaxTips/a/Common-Tax-Deductions-For...Landlords have many tax deductions they can take advantage of. Learn the common tax deductions that can help save you money.
Qualifying for the 2013 Section 179 Tax Deduction Section179.Org
www.section179.org/section_179_deduction.htmlSection 179 Depreciation Rules are not complicated tax code. Learn how to deduct the full price of qualifying equipment and/or software purchased or financed.
Home Office Deduction: a Tax Break for Those Who Work from
www.irs.gov/uac/Newsroom/Home-Office-Deduction:-a-Tax-Break-for...Home Office Deduction: a Tax Break for Those Who Work from Home. IRS Tax Tip 2013-36, March 19, 2013. If you use part of your home for your business, you may
Tips & Tools for Parents: Navigating Nanny Taxes
www.sittercity.com/article/nannytaxes.htmlFirst off, congratulations for having the bravado to read an article on nanny taxes. We know that it can be an intimidating topic, complicated by endless numbers ...
Tax Deduction- Charity Tax Deductions for VVA Clothing Donations
www.scheduleapickup.com/Tax-DeductionReceive a Tax Deduction when you donate your used items to the Vietnam Veterans of America. Tax Deduction Receipts available for every donation.
The Top 10 Real Estate Tax Deductions for Homeowners
www.realtor.com advice FinanceAs the time to file income taxes approaches, we need to take a new look at the changing tax landscape for homeowners. Here are the Top 10 Homeowner Deductions for ...
How To Get a Tax Deduction For Home Office Expenses
ezinearticles.com Finance Taxes IncomeFeb 19, 2013 A taxpayer may get a home office expense deduction in computing income tax in the USA. The home office deduction is allowed only if specific
2011 Tax Deduction for Homeowners - 4 Tips for 2011 Homeowner Tax ...
ezinearticles.com Finance Taxes IncomeNov 30, 2010 2011 Tax Deduction for Homeowners is a great way to reduce tax liability. This article contains a lot of suggestions by which you can have an advantage
Taxes: Income tax preparation, filing and deduction advice -
money.msn.com/taxesTaxes are everywhere. Learn crafty tax preparation and filing tips from the MSN Money tax experts. Our deductions might help reduce your tax liability.
Sales Tax Deduction for Vehicle Purchases - Internal Revenue
www.irs.gov/uac/Sales-Tax-Deduction-for-Vehicle-PurchasesSales Tax Deduction for Vehicle Purchases. 2010 update: Pub. 919 no longer contains Worksheet 10. Eligible taxpayers may use Schedule L, Standard Deduction for ...
0 komentar
Posting Komentar