Our "day-mom" takes care of our little girl out of her home. She provides us with a receipt for payment every week, but is not licensed. Would this qualify as a tax deductible expense?

asked 13 Nov '09, 23:31

Prea's gravatar image

accept rate: 0%

edited 14 Nov '09, 00:28

Chris%20W.%20Rea's gravatar image

Chris W. Rea

This would be a really good question for the economic professionals over at Basically Money: http://www.basicallymoney.com/ :-)

(13 Nov '09, 23:33) Scott ♦♦

Gee thanks Scott :-D

(14 Nov '09, 00:28) Chris W. Rea

I agree with MrChrister. Licensing wouldn't be related to whether you could use the caregiver's receipts as tax-deductions.

The IRS has a page worth checking out: Top Ten Facts About the Child and Dependent Care Credit, as well as Publication 503: Child and Dependent Care Expenses (PDF). Specifically check out the section "Provider Identification Test" in Publication 503; it's relevant.

The amount you're deducting for child care needs to be for a "qualified person", e.g. a dependent child under age 13, per the IRS, but the caregiver – as far as the IRS is concerned – need not be specially qualified to provide child care. However, the caregiver can't also be a dependent (e.g. your spouse or another child.) See the resources above for details.

Licensing is likely enforced at a municipal or state level, separate from the tax code, and I imagine would be more concerned with the qualifications and conditions of the child care business operator.


answered 14 Nov '09, 00:40

Chris%20W.%20Rea's gravatar image

Chris W. Rea
accept rate: 34%

That is exactly what I did last year before I got a dependent care account this year. My sister in law lived with us (for free) and charged us $xxx / month to watch our daughter. I then put that total amount into TaxCut.com last year based on the descriptions of the transaction.

My tax return happened and no ill effects.

To my knowledge, in the US the licensing is for people who take care of multiple children. In my state I understand that number to be 4 toddlers per adult because that is how all the daycare places I interviewed work.


answered 13 Nov '09, 23:40

MrChrister's gravatar image

accept rate: 3%

+1. Good answer, and thanks for signing up at BasicallyMoney.com.

(14 Nov '09, 00:42) Chris W. Rea

It really depends on what country you are in.


answered 14 Nov '09, 00:47

dreamerisme's gravatar image

accept rate: 8%

Agree, but we're assuming U.S. here since the original poster had just asked another similar question that implied U.S. residency.

(14 Nov '09, 00:49) Chris W. Rea
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Asked: 13 Nov '09, 23:31

Seen: 3,149 times

Last updated: 14 Nov '09, 03:42