child care tax credit question

So DDs daycare is a legal in-home setting, and we pay all cash. She used to not be legal, but as of Sept. 2017 she is. Last year, we didn't get any statement from her with an EIN # or anything like that, and she told us something about how she technically isn't claiming everything so we can't write it off on our taxes. I didn't say anything and didn't push it because i assumed i wouldn't get a lot anyway.

However, I was reading that we can get about 3k back for day care expenses. I don't want to ask her for her EIN number again because we really like her, she does a great job with DD, & we don't want to rock the boat by asking. I did some research online, and found her on the NYS website. So I was able to locate her NYS License ID number, but her EIN is not on there. Has anyone been through this before, or have you been in a situation where you pay cash and want to claim it? We pay $200/week, but I'm not sure how we'd prove that... It's about $7-8k/year in daycare expenses and it would be nice to get some of that back at tax season

child care tax credit question

We pay about $18,000 a year for daycare and are able to deduct like $600 (DH is telling me it isn't even that much). It comes out to such a small impact that I don't think the hassle of the paperwork is even worth it.

child care tax credit question

When I used to pay cash I was unable to claim it. When we started using a legal daycare we were able to claim it. This year it was $21k we paid. They gave us a statement. If she is not reporting this to the IRS you will run into a problem. And if you have no statement or receipts from her don’t even bother...

Re: child care tax credit question

Re: child care tax credit question

It depends on your exact financial situation. If you use a tax accountant, I’d ask them this year... but for next year. It gets tricky if you are getting refunds, it doesn’t really help. If you make “a lot” of $, it doesn’t help.

Sounds like you are in an “off the books” scenario, so you can’t deduct. However, $200 a week is crazy inexpensive. If you are happy, I’d just stick with it.

child care tax credit question

It sounds like while her daycare may be legal, that your kid is "off the books."

The tax credit is pretty minor. The maximum child care expenses you can claim is $3,000 for one child. Then depending on your income, you get a percentage of that $3,000 as a credit. I think the max percentage is 35%, so for one child the maximum credit you can get is $1,050, but it may be less depending on your income.

It sounds like you may be benefiting more by being off the books than you'd get from the credit. While $1000 off your tax bills is nice, I currently pay $300/week per child at my daycare center, so assuming you'd pay comparable "on the books", then your savings is much greater than the tax credit.

child care tax credit question

You won't be getting 3k back, you get a minimal amount back. I would consider the $200 you pay (which is cheap), as your "tax credit"

Message edited 1/21/2019 8:44:34 AM.

Re: child care tax credit question

child care tax credit question

If you are paying cash and no receipts you have nothing to prove payment. I pay cash for a sitter and there’s nothing I can do unless she claims it on her taxes. Id your sitter is still getting cash she likely isn’t claiming it and therefore you claiming it would force her to owe

child care tax credit question

Exactly what everyone else said. There is another child tax credit available this year that you might be confusing this with. The other credit is for just having the child as a dependent.

Re: child care tax credit question

Re: child care tax credit question

Re: child care tax credit question

Re: child care tax credit question

Re: child care tax credit question

Re: child care tax credit question

Re: child care tax credit question

Posted by LuckyStar

Posted by NervousNell

Posted by mommy2be716

Posted by NervousNell

Posted by BargainMama

You won't be getting 3k back, you get a minimal amount back. I would consider the $200 you pay (which is cheap), as your "tax credit"

This. We got back so little on taxes compared to what we paid in daycare it was laughable.

Oh I thought you get back 35% according to the form (2241)

I wish. Maybe you can DEDUCT up to 35% of the total cost from your taxes but that doesn't mean you get 35% back in your pocket.

I don't think you can even do that, unless our accountant is an idiot.

I guess it depends on tax bracket, but I can assure everyone we are not millionaires over here

Re: child care tax credit question

Posted by starbrightgirl8

Posted by LuckyStar

Posted by NervousNell

Posted by mommy2be716

Posted by NervousNell

Posted by BargainMama

You won't be getting 3k back, you get a minimal amount back. I would consider the $200 you pay (which is cheap), as your "tax credit"

This. We got back so little on taxes compared to what we paid in daycare it was laughable.

Oh I thought you get back 35% according to the form (2241)

I wish. Maybe you can DEDUCT up to 35% of the total cost from your taxes but that doesn't mean you get 35% back in your pocket.

I don't think you can even do that, unless our accountant is an idiot.

I guess it depends on tax bracket, but I can assure everyone we are not millionaires over here

It's not a deduction. It's a credit.

If you look at form 2441, the max you can claim is $3,000 in child care expenses for one child, and then depending on how much you make, you get a percentage of that as a credit. If you make over $43,000 - then it's 20%, which would be the $600 that many have mentioned.

If you make less than that $43,000, then the form has a table showing the percentages. You'd have to make under $15,000 to get the full 35% credit, but again you can ONLY CLAIM $3,000 for one dependent, so it's only 35% of $3,000, not of the amount you actually paid.

Re: child care tax credit question

Posted by NervousNell

Posted by starbrightgirl8

Posted by LuckyStar

Posted by NervousNell

Posted by mommy2be716

Posted by NervousNell

Posted by BargainMama

You won't be getting 3k back, you get a minimal amount back. I would consider the $200 you pay (which is cheap), as your "tax credit"

This. We got back so little on taxes compared to what we paid in daycare it was laughable.

Oh I thought you get back 35% according to the form (2241)

I wish. Maybe you can DEDUCT up to 35% of the total cost from your taxes but that doesn't mean you get 35% back in your pocket.

I don't think you can even do that, unless our accountant is an idiot.

I guess it depends on tax bracket, but I can assure everyone we are not millionaires over here

It's not a deduction. It's a credit.

If you look at form 2441, the max you can claim is $3,000 in child care expenses for one child, and then depending on how much you make, you get a percentage of that as a credit. If you make over $43,000 - then it's 20%, which would be the $600 that many have mentioned.

If you make less than that $43,000, then the form has a table showing the percentages. You'd have to make under $15,000 to get the full 35% credit, but again you can ONLY CLAIM $3,000 for one dependent, so it's only 35% of $3,000, not of the amount you actually paid.

OK yeah that's what it is. It's been so long since we had daycare and then when DH retired we still sent her 3 days a week and since he was no longer working, daycare was not considered a necessity so we couldn't deduct it anymore. So we havn't been able to deduct it in forever.
But I do remember we got next to nothing for it on taxes.

Re: child care tax credit question

Posted by Mrs213

Posted by NervousNell

Posted by starbrightgirl8

Posted by LuckyStar

Posted by NervousNell

Posted by mommy2be716

Posted by NervousNell

Posted by BargainMama

You won't be getting 3k back, you get a minimal amount back. I would consider the $200 you pay (which is cheap), as your "tax credit"

This. We got back so little on taxes compared to what we paid in daycare it was laughable.

Oh I thought you get back 35% according to the form (2241)

I wish. Maybe you can DEDUCT up to 35% of the total cost from your taxes but that doesn't mean you get 35% back in your pocket.

I don't think you can even do that, unless our accountant is an idiot.

I guess it depends on tax bracket, but I can assure everyone we are not millionaires over here

It's not a deduction. It's a credit.

If you look at form 2441, the max you can claim is $3,000 in child care expenses for one child, and then depending on how much you make, you get a percentage of that as a credit. If you make over $43,000 - then it's 20%, which would be the $600 that many have mentioned.

If you make less than that $43,000, then the form has a table showing the percentages. You'd have to make under $15,000 to get the full 35% credit, but again you can ONLY CLAIM $3,000 for one dependent, so it's only 35% of $3,000, not of the amount you actually paid.

OK yeah that's what it is. It's been so long since we had daycare and then when DH retired we still sent her 3 days a week and since he was no longer working, daycare was not considered a necessity so we couldn't deduct it anymore. So we havn't been able to deduct it in forever.
But I do remember we got next to nothing for it on taxes.

It doesn’t even pay to work lol

Re: child care tax credit question

My DD used to attend a licensed in home daycare. I used to have to pay cash every week, however at the end of the year I always asked for a receipt with Tax ID . They should have one if they are legally registered. This year they shut down suddenly in November (license was suspended by the state) but I kept track of how much I paid per week for the year until they shut down, and I am referencing the same tax ID # I was given in the past. I spent over 13k so I want to be able to at least claim it. If I am ever asked for a receipt I do have copies of the contract they made me sign for the year which shows my weekly amount.