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Author: qluo Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: child care credit Date: 2/26/2001 4:54 PM
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Can someone tell me if I can take child care credit?
My daughter was born last April. I had a 8 weeks maternity leave and back to work after that. My parents came over to live with us and help out for about 8 months since my daughter was born. I gave them some money once in a while but it was not for their service, I know they were willing to help out without any pay and I would have paid much much more if I pay for a nanny or daycare. Over the time I gave them about $2500, can I take child care credit for it?
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Author: stkeros Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 47243 of 121061
Subject: Re: child care credit Date: 2/26/2001 5:20 PM
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according to the info on the irs web site, money paid to relatives, even ones who live with you CAN count as child care expenses:

Payments to Relatives

"You can count work-related payments you make to relatives who are not your dependents, even if they live in your home."

More complete info can be found at irs.gov, and specifically at http://www.irs.gov/prod/forms_pubs/pubs/p50301.htm

But I would be careful because by listing your parents as care providers, I don't think the money paid to them would count as a tax-free gift, but rather taxable income to them. In addition, you would have to look into whether you'd have to pay FICA on the money paid to them.

But assuming you meet the other requirements of the child care credit, it seems the fact that the care providers were your parents does not automatically count you out from claiming the credit.

stkeros

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