I have been searching for a new sitter for my daughter and I think I have found the right one. Another mom, aged 35,who is willing to bring her daughters (ages 2 and 5) to my house and babysit for my daughter, for about 3 hrs a day, on school days and about 6.5 on non school days. We have agreed on a rate,$18.75 for school days and $30 for non school days, but as soon as I told her that I would be claiming my child care expenses on my taxes, she's kind of balked, or should I say her husband has and he doesn't want to have to claim the income. She currently works for a day care at a fitness place and I told her it would be just like claiming her income taxes there, with one big differnece being that I wouldn't be able to take any deductions. I don't want to lose her over this but claiming our child care expenses makes a pretty big differnece in how much we pay in taxes. I know that if she refuses I can still claim it but I don't want to cause any problems for her. Do you think that there is anyway we can make this a win-win situation?
Thanks for any input!
I just wanted to thank everyone for your responses I really appreciate all the input!
Well she and her husband finally agreed to claim the income, I was going to take the necessary steps to take the required deductions; and pay at least half, to net her close to the same amount as she is currently making. But it was my inability to give her a long term commitment that finally broke the deal.(I told her when I interviewed her that I am currently looking for a new job, with better hours) I had an interview today for a PT job which would put me at home before my daughter gets off the bus.
Just a little FYI to anyone that thought I was being cheap. I did my research before offering pay. The going rate in my area is anywhere between $3.75-$10hr, and I picked about a half way point, I was seaching for a babysitter, not a Nanny. and I thought that this was fair as she was going to be brining her two childeren with her. Also for the same amount of time (3 hrs a day)a local licensed daycare center charges only $10.
I had the same situation with my daycare provider as you do. I wanted to claim it on taxes and she didn't want me to because she didn't want to report the income on her taxes. I loved how well she took care of my kids and we agreed that I would pay her cash and not claim it on taxes if she charged me less. It was a win-win for both of us:) I payed her cash and got a better rate and she didn't have to claim income.
Sounds like you'd be getting a great deal at that rate. And, I'm guessing you just had a miscommunication as to what rate you would be paying. You were factoring in the savings from taxes and she wasn't. If she's worth it, you should just offer to pay her a bit more so that she will agree to claim it on her taxes. I have a nanny and she makes right about 3 times as much and while it's financially difficult, the care and love she gives our kids is worth it.
And, I can't believe other moms are suggesting you file it on your taxes without telling her. Why would you create an uncomfortable and possible hostile situation with the person watching your child? If you can't agree, simply don't hire her.
Just a thought say you did claim your day-care expenses and you get audited.They will ask for itemized bill of services rendered and fees. If she does not claim it you have no proof you paid it unless you keep copy of checks or money orders.Depending who has what one or both of you will probbly be in trouble. So I would talk it over with her again and see if you can work out some kind of arrangement that work for both of you.As far as I know she would not have to claim it if she made under a certain amount I am not sure what the amount is though.You may be able to look that up to see what it is. That might make it a win win for both of you if you can find that amount and agree to that.
Godd Luck,
Shan
You should go ahead and claim your childcare expenses, no matter to whome they are paid. If she chooses to "fly under the radar", so to speak, then that is her choice, not yours. Good luck!
It sounds to me like her rates are cheap. My experience has been that either you pay more for a sitter and deduct it from taxes (also look into the deduction from your pay at work for sitting expenses) or you play less for a sitter and not deduct it from your taxes.
I found that being honest in all areas is much better. In other words, integrity in all areas saves you problems later. Someone who isn't honest in some areas is often not honest in others. The sitters I saw when I was looking for my son, were also unlicensed and it would have been a gamble on how well a sitter they would have been for my child.
I ended up opting for a more expensive, what I though would be a very reliable and solid situation for especially my son and I. I was very happy with the choice I made.
Hi E. -
As someone mentioned earlier, this is HER problem, not yours and, truthfully, this is a lesson we all need to learn from both sides.
When you a hire a babysitter to work in your home, you will not be taxing her pay directly, therefore she is an independent contractor. She becomes responsible for monitoring and paying her own taxes. On the other hand, because of your situation, it's not like you will be submitting your babysitter's Social Security number come tax time; rather, I would imagine that you will just gather together your documents and create an itemized list of your child care expenses. So, even if you claim this stuff on your taxes, the IRS would be hard-pressed to link the income to this woman on paper.
So, she should understand that what *you* do with your taxes does not automatically dictate what *she* needs to do with hers (although I guess we know the answer to that!) Personally, I wouldn't have mentioned it to her at all.
If I am somehow mistaken here, and you DID ask for a social securtiy number, well - that changes everything and I wouldn't work for you either. LOL
Good luck!
You should offer to up her wage enough to cover her share of taxes. This way she still ends up with the initial agreed upon rate.
You know I may be way off here but I thought that in order to claim in home care like that it would also make you the employer thus responsible for paying the employer taxes for her. I never claimed the in home baby sitter cost cause of the hastle it would cause the both of us.
Wishing you luck on figuring out the situation.
I think that you should be careful with this. If for any reason whatsoever you were to be auditted by the IRS, you would need to show proof of your day-care spenditures. As a daycare owner, I provide my clients with documentation at the end of each calendar year to show their daycare costs for the year. Also, when you complete your taxes, you are asked for the providers tax id number and you won't have this if she does not agree. It is a fairly big tax break for you, so consider all options!! Good Luck!
It's difficult to judge situations. If you are personally convicted that the income is to be claimed on taxes, then stick with it. If she(or her husband) don't budge, hold fast to your conviction. And seek another sitter who is willing. As long as her income stays under 10k, taxes aren't an issue. If they do, and it is not claimed, is it not a form of stealing? And perhaps, that influence can spread to other things... So do you really want a baby sitter who does not share the same beliefs as you influencing your child for hours each day? Something to truly consider at the least....
E.-
Wow! What a dilemma. It sounds like except for the conflict over payroll, this is an ideal situation for you. If you trust this woman and your daughter likes her, it is worth it to try and work something out- good child care is worth it's weight in gold.
One option would be to offer to pay her social security and unemployment tax (talk to an accountant about how to work this) instead of deducting it from her pay. You end up paying a little bit more per hour, however.
Could you swing it to offer cash on the days she works less hours, but then on the longer days she is an employee?
Are there any after school kids' programs your daughter could attend?
My $.02- don't know if it helps.
M.
As a childcare provider and as a mom who use to work out of the home I can see your point on wanting to claim childcare exspense on your taxes. She and her husband should understand that this should be treated like the job she has that would automaticlly take out her taxes. Yes it does make it a lil harder cause she has to pull out the amount of taxes and hold on to it until it comes time do her taxes but it may also help them on their taxes. You can even make the suggestion that you can take out her taxes out of the money you give her and hold on to it untill it comes the time to do her taxes. I don't understand why the husband would have a issue with that if you make the suggestion. Since she already has taxes taken out of her job now it shouldn't be a problem it is just the same as if working for you. I am sorry if this rambles on a lil but i hope it helps out a lil or can give you a suggestion on another option.
P.S. I know how you feel about your 8yr old going on 20. Mine is 9yrs old going on 25. I am already dreading the teenage yrs and preteens also. :)
S. McDowell
If she doesn't claim the income on her taxes, that's tax evasion, and thus illegal. Therefore, it should be her problem, not yours. Take your deductions. My last babysitter just charged me the state sales tax, which made paid her income taxes, too.
J.
Having been an in-home care provider, I say they are very wrong to expect you not to claim the expense on your taxes. Seeing as it is against the law not to claim any income made, I would put my foot down. You don't need to get in trouble for helping them break the law. Would you want your child watched by a person so willing to break the law just cause it is better for them? Car seats are a law too, but not always vey convenient, what if she breaks that one too? If you choose to use this woman, make sure you claim the expenses, and the rest is up to them, just make sure you keep very accurate records (since they might not), and get her SSN (since you need that for taxes) before she starts. Just my thoughts.
I don't think this is destined to become a win-win for both of you. Obviously, your babysitter wants to accept her pay "under the table." This is tax evasion and it is illegal. You have absolutely no obligation to help her break the law. Though it is unlikely she would be caught, it is still a possibility that she and her husband will be audited. (And if her husband is so adament about concealing income, I'd be willing to bet they have other issues the IRS would just LOVE to know about . . . which makes it more likely the IRS will get around to auditing them at some point - particularly since someone like you can just pick up the phone and report them to the IRS. They are obviously not shy about expressing their desire to commit income tax evasion - and that could bite them at some point!)
I understand that you don't want to lose her, but you also don't want to get into a situation where you are paying an employee under the table. This could create a whole host of problems for you that you just don't need.
My recommendation is that you figure out how much you expect to pay her between now and the end of the year. Then get a copy of the IRS income chart that shows the rate of the different income brackets. Provide her with a copy of both and let her (and her husband) figure out if the amount you expect to pay her will move them up into a higher tax bracket. (If it won't, then they won't even be required to pay any extra in taxes BUT if they fail to report the income AND they get caught they will get hit with penalties and interest and would probably be the target of an audit over a period of several years.)
