Does child care provider need to give parents a receipt for tax purposes?

Question

Folks, my wife and I are going have our son watched by a neighbor/close friend. Will the friend need to give us anything for tax purposes? Will we need anything from them when we go to file our taxes? A receipt or anything.

Answer 1

You'd be wise to at least pay by check so you have documentation.  You will need the neighbor's social security number.

Answer 2

As Boston said, if the child is watched for in the neighbor's home, you give them a W-10 (a polite way of asking for their legal name, address and SSN) and pay by check.

You can still try to claim the child and dependent care credit without their SSN, but it's a hassle.  The IRS expects that SSN (so they can systematically check to see if they reported the income on THEIR tax return).

If the person refuses to fill out the W-10, find another child care provider.  The refusal to fill out the W-10 or a demand that you pay cash is a symptom that something is wrong.

If they come to your house to regularly babysit, you ask them to fill out a W-9--because YOU will be issuing them a W-2...and making sure the fica/medicare taxes are paid.

Answer 3

Yes.  You need to get a receipt for tax purposes.

Answer 4

Assuming that the provider isn't providing the child care in YOUR home, give them a Form W-10 and do not pay them anything until they have completed it and returned it to you.  

The provider should provide receipts, however you should ONLY pay by check if they do not.  Your canceled checks will suffice as your receipts.

If the care is so that you both can work or look for work or one of you work and the other go to school you may be able to claim the Child & Dependent Care Credit.  You'll need the data from the Form W-10 to claim that, along with proof of payment either in the form of receipts or canceled checks.

The person providing the care is required to report the income on their tax return but that's not YOUR problem or concern.

Answer 5

Depending on your state's laws - you may need a tax id number from the child care provider. When deducting the cost of child care, you will need that number.  I'm not sure but you may be able to use receipts as proof - but it seems unlikely to me.  You can look up the information on www.irs.gov. There may be information for you there.

The only reason you would need to prove child care is if you deduct in your taxes or have to show proof for some sort of financial assistance.