Do this first in order to legally take the child care tax credit | USTaxAid

Diane Kennedy's Blog

Do this first in order to legally take the child care tax credit

Written by Diane Kennedy, CPA on March 27, 2018

If you pay for child care for your child, you may be able to claim a tax credit of up to $1,050 per child under the age of 13. The exact amount of credit you receive is determined by how much you pay your providers and how much your adjusted gross income is.

To qualify for this credit, you need to identify all of the companies and people who provide child care to your child. That includes reporting their employer identification number (EIN for companies) or social security number (individuals).

If you hire someone individually to work in your house, like a nanny, you have a household employee. That requires that you pay payroll taxes for them and provide them with a Form W-2 by January 31st of the year following.

This all can be a lot more complicated than you might think initially. But if you fail to file all of the proper forms and pay the payroll taxes, you could face penalties and interest.

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