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Texas taxes question (Child Care)? |
I am getting ready to file taxes and I know that I can use child care as a deduction. However, I am not sure if I need to pay taxes. According to Federal Law, if you have a child care provider in your home you have to pay taxes if you pay them over 1,000 dollars. I paid my sister in law, 950 dollars this year to take care of my baby while I was student teaching. Thus, I do not need to pay any federal taxes. However, what is Texas law regarding this issue? and what documentation do I need to take this credit? This could get a little more complicated than you might want it too, but here is something straight from the IRS. I am thinking of having a family member baby-sit for my child full time in their own home while I work. Are either of us responsible for taxes on the money I would pay? Can I claim this money as a child care expense even though my family member is not a registered day care provider? You may have qualified child care expenses if the family member baby-sitting is not your dependent or your child under age 19 and you meet all the tests to claim the Child and Dependent Care Credit. Who is responsible for taxes depends on whether your family member is your employee or is self-employed. See Publication 15-A (PDF) , Employer's Supplemental Tax Guide, for a discussion of how to tell whether someone who is performing services for you is an employee or an independent contractor. If your family member is not your employee, then the family member will be responsible for paying income taxes and self-employment taxes on the money earned. If your family member is your employee, then you are generally responsible for withholding and paying the taxes. However, special rules apply to family employees. See Publication 15 , Circular E, Employer's Tax Guide, for these rules. References: Form 2441 (PDF), Child and Dependent Care Expenses Form 2441 Instructions, Child and Dependent Car Expenses Publication 15, Circular E, Employer's Tax Guide Publication 15-A (PDF) , Employer's Supplemental Tax Guide Source(s): http://www.irs.gov/faqs/faq7-1.html... IRS By "taxes," do you mean employer taxes? Like unemployment, soc sec etc? If so, usually the state will follow along w/ the fed. I suggest you go to Texas' state web site and find out there. |
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