Child care is a significant expense for parents who work outside the home. To assist with the burden, the Internal Revenue Service permits qualifying taxpayers to deduct certain expenses for child care so you can work, including those paid to an au pair. An au pair is a foreign nanny who lives with her host family while also accepting a small salary to help around the house and with child care responsibilities.
Child Care Credit
The Child Care Tax Credit may be taken under specific circumstances to alleviate your tax burden and offset the cost of child care. If your au pair took care of your child who was 12 years old or younger so you could work or look for work, her salary is considered a qualifying expense for the Child Care Credit.
Single, Married or Separated/Divorced
If you are married, you may claim the Child Care Credit only if you are filing jointly. If you are officially separated or divorced, the parent who had the child more than six months of the year and paid for child care in order to work may claim the au pair's salary on the Child Care Credit. Single parents may claim an au pair's salary for the Child Care Credit.
Percentage of Qualifying Expenses
Despite the claim that all child care is tax-deductible, you may not claim 100 percent of your child care expenses. The Child Care Credit was intended to relieve some of the tax burden to assist people with lower incomes in providing for their families. You may deduct up to 35 percent of qualifying expenses, including the au pair's salary.
To claim the au pair's salary as a tax deduction, you must file Form 2441 with your Form 1040. You must list the au pair's name, address, tax identification number as applicable and the amount you paid him or her for the year. Form 2441 will also require you to list your dependent child's name and Social Security number as well as the expenses incurred for each child if you have multiple children. Fill out the full form using the calculations provided and attach it to your Form 1040 when filing your return to receive the deduction.
- IRS.gov: Topic 602 - Child and Dependent Care Credit
- IRS.gov: Ten Things to Know About the Child and Dependent Care Credit
- IRS.gov: Form 2441 Child and Dependent Care Expenses
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Based in Southern California, Daniel Holzer has been a freelance writer specializing in labor issues, personal finance and green living since 2004. His recent work has appeared online at Green Your Apartment and other websites. Holzer studied English literature at California State University, Fullerton.