Financial Information
Childcare deduction.?
Question : Childcare deduction.?
I paid cash for someone taking care of my son, but have no receipt and have no SSN from the babysitter, I only have her name and address, She does not want go give me her SSN, I am guessing that she does not want to claim this as her income. Can I still be able to file this on my tax return? If IRS audit me, what would be defense with the IRS? Will I get in trouble? P.S. My wife and I both have a full time job, will this be good enough to show the IRS that we definitely pay for someone to take care of our son while we are both at work?
irs audit defense
Best answer:
Answer by Brian G
If you do not provide the name, address, and TIN or SSN of the care provider, the IRS may reduce or disallow the child care credit (not the same as an audit). If you do not provide the information, you must be able to show due diligence in trying to get the information.
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#2 written by ChiKristin 1 year ago
If this woman works in your home then you technically are an employer and you should have been paying your portion of taxes for her throughout the year. If she works outside your home you’re still on shaky ground depending on whether she is accredited. You may be inviting an audit by trying to claim this credit and get yourself in more trouble than it’s worth.
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#3 written by bostonianinmo 1 year ago
Brian G & PepsiLime are correct. See the pub and do your due dilligence and document it on the Dependent Care Credit form.
Tell the provider that you’ll be notifying the IRS of the claim for the credit, along with her name and address and her refusal to provide her SSN (as is required by law in this case). That may be enough to rattle her cage and get her to give it up.
Whether she claims the income or not isn’t your concern but the threat from you that you’re notifiying the IRS anyway may bring her to her senses.
In the future you should pay her by check, and by check ONLY. If she insists on cash, have her endorse the back of the check and cash it for her. Don’t deposit the check of course, but keep it for proof of payment.
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#4 written by PepsiLime 1 year ago
You can still claim it on your tax return, and it might get accepted or it might get rejected by the IRS. With paying her cash you have no proof at all that you paid her anything though. If the IRS rejects it, and you still want to use her then you need to tell her that you’re claiming what you pay her, and that she needs to also claim it as income. You should also pay her by check so that you have something to support how much you paid her. If she doesn’t agree to this at all, it might be time to look for another sitter.
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It really depends on how far you want to take this… worst case, you could be in court five years from now testifying against your sitter. You should be able to show you are in the right, but do you want this person to continue babysitting for your child… if you tell her you are going to notify the IRS about her, she may quit. You can file your return claiming the childcare deduction and if the IRS rejects it, then you can decide if you want to pursue it furthur.