FSA and occasional babysitter?

SarahFin

I hoping someone knows the answer because I can't find it!

I have a Flexible Spending Account set up because we use childcare regularly.  I didn't put in a ton of money because DS started daycare in June and would only be PT for the most part. 

My question is, when my cousin works for me as a nanny (I pay her because she needs the money and I need the care) can I submit a claim to my FSA?  At what point (money-wise) would she need to claim it as income? 

On the rare chance that I don't use all I've put into my FSA account, I'd like to be able to claim what I've paid her, but I don't want her to have to pay taxes if she only works for me a handful of days.

TIA!

MKE6115

How old is your cousin? If she is under 18 then I think you are okay but I really think in order to use your FSA the person needs to claim the money as income. But check with your HR dept.

SarahFin

She is 26.  I don't think my HR department can help because the FSA is managed by an outside company.  When I considered an in-home daycare vs. Facility, I asked them (the outside company) about who I could use to make claims and what I needed.  They just said the person needed an SSN so that they knew it was a real person.  They wouldn't offer any advice regarding limits for the childcare providers.

hmmmm... I might try the Money Matters board as well and I'll report back!

MKE6115

Good luck. My work offers a FSA but we do not use it right now. DS is only in childcare most days 3 hours a day (I work in the evening and DH works day shift). So we do not pay enough each month for me to feel it is worth it. Did you google FSA to see what you can find?

molldoll71

I am pretty sure they have to claim it because on the form you have to give them either their social secutiry number or tax ID number.

flyer23

The info you want is here: https://www.irs.gov/publications/p926/ar02.html#d0e303

You don't have to pay taxes as long as you pay her less than $1000 in each quarter and less than $1600 for the entire year.

SarahFin

Flyer, thanks for the link, but I'm not sure it's what I was looking for exactly.  That info says that I don't have to pay employment taxes, but I was wondering if I could use pre-tax dollars to pay her and if she had to claim the income.

On the Money Matters board, they said yes, she would have to claim it because it is income and I understand that since she's over 18, etc.

I think I'll just pass on trying to use the pre-tax dollars, anyway, but thanks for all the help everyone!

flyer23

Ahhh, sorry, I got mixed up. I think this is the info that you want, then: https://www.irs.gov/businesses/small/article/0,,id=98846,00.html#4

If her self-employment income is over $400, she needs to claim it. Keep in mind that this doesn't just include self-employment income from working for you, but also any other babysitting, etc. that she does.

SarahFin

Thank you, Flyer!  I'm mostly a lurker around here, but I love watching the pics change of your DD as she grows - so cute!!!