How much money do you get back on your taxes by reporting childcare expenses?

Question

My wife and I are weighing our options of a licensed vs. unlicensed daycare.

If we pay $125 and they file taxes, how much do you think we will get back on ou tax return?

Answer 1

1.  The person providing the daycare HAS to report the income.  The fact they are licensed or not has nothing to do with this.

2.  Even if they refuse to give you their name/SSN, you can still report the money paid (the IRS has the right to audit them) as a childcare expense.

3.  Unfortunately, how much you "get back" depends on your tax situation.  childcare is a non-refundable credit.  If you owe taxes, it can reduce the amount owed.  If you do not make enough to owe taxes, it won't.

Answer 2

20% back

there is a limit though.

if you paid $125, you would get back $25. you do have to get the daycare's id # or the babysitter's social.

Answer 3

Depends.

On your income, your tax liability, how much you pay, how many children,

There's a limit on it too

You need the name, address and social security number of caregiver to include on taxes, regardless whether licensed or unlicensed.  Licensed means they actually took some courses and have had some inspections.

If you have no tax liability and get EIC, you generally won't get any benefit from claiming child care