This tax credit will help offset your childcare costs — if you’re honest with the IRS

If you want a tax credit for paying your nanny, you’ll have to get right with the IRS first.

Hiring a caregiver for one infant child costs an average of $596 per week, according to data from Care.com. On a monthly basis, the payment is on par with many mortgages: $2,384.

Moreover, in 30 states and Washington, D.C., the annual cost of sending an infant to a childcare center costs more than annual in-state tuition and fees at a public college, Child Care Aware of America found.

Resist the temptation to sneak a cash payment to your caregiver. You’re running the risk of steep penalties from the IRS, including tax evasion charges.

You’ve also made yourself ineligible to claim the child and dependent care tax credit, which can be valued at up to $1,050 per child under age 13 — or $2,100 for two or more kids under 13.

Nobody is immune from reprisal over failing to pay household employees the right way.

Consider the so-called Nannygate controversy back in the 1990s surrounding President Bill Clinton’s picks for attorney general, Zoe Baird and Judge Kimba M. Wood. Both women came under fire for the way they hired and paid their childcare helpers…Read more>>

Source:-cnbc