Taxes

Shutterstock/Amble Design

How To Deduct Babysitting From Your Taxes

It's not as easy as writing down "27 date nights" in your expense sheet.

Updated: 

It costs major money to hire child care, whether it's a babysitter, nanny, or a day care service. Add in all the other costs that come with parenting, and you may find yourself stressing come tax season. While there are some tax breaks you can receive as a parent, many have tried to deduct babysitting expenses from taxes as well. But how does it work?

Well, according to TurboTax, you may qualify for a tax credit of up to 35% of expenses of $3,000 for one child. This tax credit, called the Child and Dependent Care Credit, counts for children under the age of 13 who have attended a day care center, summer camp, or have been babysat. See? Kids aren’t always sucking the money dry from you, right?

Beth Logan, an enrolled agent, adds that while you can technically write babysitting expenses off, you have to have a receipt and a tax ID number for the provider. “So a day care center will give you a receipt with their EIN — employer ID number for taxes. Nannies will give you their name and social security number — you usually have to provide a W-2 and complete Sch. H. But the 16-year-old down the street is unlikely to give you his/her social security number and a receipt.”

TurboTax further noted that you can't get a tax break if the person watching your child fits one of the following descriptions: your spouse, other parent of the child, anyone listed as a dependent on your tax return, or another one of your minor children. You can try to look for potential babysitter candidates outside of your family to try to receive a tax break for next year, as many can be found online or through community postings, but sorry, a sibling or the other parent will not count toward getting that tax break. Further proving that when Dad watches the kids, he’s not babysitting, he’s parenting. Thanks, Uncle Sam.

PeopleImages/E+/Getty Images

Finances can be confusing though. How does a tax credit differ from a tax deduction anyway? Financial planner Matt Becker wrote in a TurboTax article that a tax credit differs from a tax deduction because a credit cuts your tax bill by dollar amount, while deductions reduce the amount of income you need to pay tax on. Logan says, for example, “If you have $20,000 of taxable wages and $1,000 of deductions, then you have only $19,000 of taxable wages.”

You need help when it comes to taking care of your child and that's perfectly understandable. If you and your spouse have a packed work schedule, or just need some time for yourselves, be sure to remember the qualifications for a babysitting tax break the next time you book child care — and grab their social security number, EIN, and a receipt.

Expert:

Beth Logan, EA with Kozlog Tax Advisers and author ofDivorce & Taxes: After Tax Reform.

This article was originally published on