Child Care Tax Credit

[orthodoc1984]

My wife has decided to go back to work part time.  She will make around 30k for the year.  We are considering hiring a nanny for $800/month.  We were planning on paying her cash for simplicity.  We would like to use the $3000 child care tax credit next year but were wondering if paying our nanny cash would affect our ability to use that credit?

[jfoxcpacfp]

orthodoc1984 wrote:

My wife has decided to go back to work part time.  She will make around 30k for the year.  We are considering hiring a nanny for $800/month.  We were planning on paying her cash for simplicity.  We would like to use the $3000 child care tax credit next year but were wondering if paying our nanny cash would affect our ability to use that credit?

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Are you saying you won't report her wages to the government? If so, that gets a big fat NO. Being audited is not simple. If your nanny gets crosswise with you, has an accident, gets laid off, etc., expect to be reported. You have far more to lose than (s)he does. Just do it right and sleep well at night.

As long as you are reporting the wages, cash or not, you'll be able to use the Child Care Credit.