Could You Claim a Tax Credit for Your Nanny?
Could You Claim a Tax Credit for Your Nanny?
Although tax laws have certainly changed under the Tax Cut and Jobs Act, there are still numerous tax credits available. Some of these credits are obvious. But there are several you might be overlooking.
For example, did you hire or use a nanny throughout the year? Many high net worth individuals with kids employ nannies. If you’re one of them, then you could be eligible for the child and dependent care tax credit. With this credit you could qualify for as much as $1,050 for a child younger than 13. If you have more than one child, that number rises to $2,100.
However, be aware, if you’re hoping to qualify for this credit then everything has to be “on the level.” In other words, you must pay your nanny legally, as an employee, and remit the necessary employment taxes. If you’re paying your nanny under the table, then you won’t be able to qualify for this credit.
In order to be in compliance with the IRS, and be eligible to claim this credit, there are a few things you must do. You need to fill out a Form I-9, a Form W-4 and a Schedule H.
A Form I-9 is used to verify the identity and employment authorization of your nanny. A Form W-4 allows you to withhold federal income from your nanny. And a Schedule H shows how much you paid your nanny. It also shows how much you spent in applicable Medicare and social security taxes, and unemployment.
Once you have everything in order, you will likely qualify for the credit.
We hope you found this article about “Could You Claim a Tax Credit for Your Nanny?” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
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Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
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Introduction (teaching business success at Barr Business School) In this interview, Alan Olsen, CPA, MBA discusses teaching business success with Dr. Frumi Rachel Barr. Dr. Frumi Rachel Barr is the Founder and Chief Mentor at the Barr Business School. Transcript: Alan Olsen Hi, this is Alan Olsen and welcome to American Dreams. My guest today is…
Introduction (one innovative approach to treat congenital heart disease ) In this interview, Alan Olsen, CPA, MBA discusses how regenerative medicine can fight congenital heart disease with featured guest Dr. Timothy Nelson, MD, PhD. Dr. Nelson is a general internal medicine practitioner, with a specialty interest in regenerative medicine and the director of the Todd…
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