Daycare and Taxes

uofibabe

How do you claim daycare cost on your taxes?  I know if you use a DC that is liscensed you'll get a statement from them showing how much you paid out.   Had a friend text me last night "were you able to claim child care on your taxes? we just found out today our day care provider doesnt claim income so we cant. just wondering if thats the norm or illegal."  

I didnt really know what to tell her.  I told her our in home daycare providor said she did but obviously she is a liar so I dont know if she really does or doesnt.  And now that we are at a liscensed daycare she told me that we can claim it on our taxes and she'll provide us info at the end of this year.  help! 

NDwife07

Yipes, that sounds fun for your friend.

Do you use Turbo Tax or another similar tax software to file? If so, it will walk you through where to put it. I couldn't tell you the exact place on the 1040 to do it, but you'll put the full amount you paid in 2010.

If you put money in a flexible spending account for dependent care, you can't claim the expenses because you're putting the money in the account pre-tax.

uofibabe

NDwife07:

Yipes, that sounds fun for your friend.

Do you use Turbo Tax or another similar tax software to file? If so, it will walk you through where to put it. I couldn't tell you the exact place on the 1040 to do it, but you'll put the full amount you paid in 2010.

If you put money in a flexible spending account for dependent care, you can't claim the expenses because you're putting the money in the account pre-tax.

I told her she could claim it and then it would just be turned around on her daycare providor if she got audited because the DC providor didnt claim it as income (not sure if that's the right thinking).   I'm not sure what I'm going to do because we did use in home daycare providor who said she does claim her income so I'll probably go ahead and claim it this year and for sure next year since we are at a liscensed daycare who is on top of things   yeah!

MrsJMB

She needs the lady's EIN or SSN. The lady can't refuse to provide the information. If she does, then they need to prove due diligence and still claim the credit.  That being said, if they go ahead and report the payments they should probably start looking for new childcare.  Why did they not discuss this when they found her?

 Here's the IRS info:

Provider Identification TestYou must identify all persons or organizations that provide care for your child or dependent. Use Part I of Form 2441 to show the information.Information needed.   To identify the care provider, you must give the provider's:Name,Address, andTaxpayer identification number.   If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. If the care provider is an organization, then it is the employer identification number (EIN).  You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). In this case, enter ?Tax-Exempt? in the space where the tax form calls for the number.  If you cannot provide all of the information or the information is incorrect, you must be able to show that you used Due diligence (discussed later) in trying to furnish the necessary information.Getting the information.    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including:A copy of the provider's social security card,A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee,A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, orA letter or invoice from the provider if it shows the necessary information.

   

uofibabe

MrsJMB:

She needs the lady's EIN or SSN. The lady can't refuse to provide the information. If she does, then they need to prove due diligence and still claim the credit.  That being said, if they go ahead and report the payments they should probably start looking for new childcare.  Why did they not discuss this when they found her?

 Here's the IRS info:

Provider Identification Test

You must identify all persons or organizations that provide care for your child or dependent. Use Part I of Form 2441 to show the information.

Information needed.   To identify the care provider, you must give the provider's:

1. Name,

2. Address, and

3. Taxpayer identification number.

 

   If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. If the care provider is an organization, then it is the employer identification number (EIN).

 

  You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). In this case, enter ?Tax-Exempt? in the space where the tax form calls for the number.

 

  If you cannot provide all of the information or the information is incorrect, you must be able to show that you used Due diligence (discussed later) in trying to furnish the necessary information.

 

Getting the information.    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including:

1. A copy of the provider's social security card,

2. A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee,

3. A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or

4. A letter or invoice from the provider if it shows the necessary information.

 

   

Thank you so much for this info.  I guess I'm going to have to do the same thing in order to claim the daycare expenses that I had when we used our in home daycare providor before switching to the new one that is now liscensed!  so much fun.

I think my friend has used the same lady for awhile so i'm not sure why this is just now coming up.  I'm going to give her this info and hope it helps. 

lemen99

It looks like you got the info you needed.

We claim ours but we have proof of childcare expenses from our payroll company we contracted when we set up our nanny business.