Do I need my babysitter’s Social Security number?

Jane Bryant Quinn
by Jane Bryant Quinn, Dimespring Contributor  (@janebryantquinn)

 

You do. That is, if hope to take a child-care credit on your income tax return without running into problems with the IRS.

The child-care credit is for working parents who pay for the care of one or more children younger than 13. To qualify, you have to tell the IRS how much money you paid and to whom — by name, address and Social Security number.

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One big problem: Lots of babysitters want to work off the books. They’re not reporting all their income to the IRS and don’t want themselves exposed, so they won’t give out their Social Security numbers. What’s an honest taxpayer to do?

The IRS says you can still get the credit, as long as you show that you tried to get your babysitter to cooperate. You might write the sitter a letter, asking for the Social Security number, or send several emails.

When you fill in Form 2441 (the form you use to claim the credit), attached a statement saying that you couldn’t get the sitter’s number, plus copies of the letters or emails your sent. Assuming that you have the sitter’s address, the IRS might try to track him or her down.

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As for the tax break itself, the credit applies to the first $3,000 in child-care expenses for one young child and $6,000 for two children or more.

People with low adjusted gross incomes ($15,000 or less) can reduce their taxes by 35 percent of their qualifying expenses. As income rises, the credit declines. It’s worth 20 percent of your child-care expenses, on incomes of more than $43,000.

“Expenses” include babysitting, day care, day camp and nursery school, but generally not kindergarten or sleep-away camp.

You also can’t count child-care payments made to your own child who’s younger than 19 or anyone you claim as a tax dependent.

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You’re a "working parent” even if your job is only part time or you’re self-employed and work from home. If you’re married, both parents have to work. (Exceptions: you get the credit if one spouse attends school full-time or is incapacitated.)

A personal tax reminder (perhaps unwelcome): A regular babysitter is an employee. You should be paying Social Security taxes and unemployment taxes on his or her earnings. If you pay off the books, you’re running a tax risk yourself.