Hello,

I am going to be watching my sister's kids after school. There are two of them, ages 6 and 8. My sister is single and makes approximately $75K. I am just going to be picking the kids up after school, helping them with homework, and keeping them until 6:00 (occasionally later, I'm sure). I do not want to get a tax ID and claim a home daycare business (I am aware of the write-off benefits, but I am unwilling to do this at this time), but my sister would like to have the same financial benefit (and I agree) as she would if she was able to claim the child care credit. Any idea what the general percentage would be off of standard daycare rates? 20% off daycare? 30%? The money will be helpful for me as I'm not working right now, but I want it to be fair for both of us. Any ideas?

Thanks so much for any insights you can provide!

Kim

I can't remember exactly how this works, but I think that some percent of what you pay in child care, subject to a maximum, is available as a tax credit (gets subtracted from her tax liability). I think the write-off % or the maximum is a function of income level also. Sorry, I'm not much help, am I? If she did her '06 taxes with TurboTax or some other program, maybe plug the numbers in and see what she would have saved and go from there.

cj/

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Depending on your state and county laws/policies, it may not be necessary to be licensed.
In my county, the following criteria might exempt a child care program from state licensing:
~Family day care programs which provide care for the children of only one family.
~Informal child care arrangements, such as co-ops, shares, exchanges and playgroups, in which no money is exchanged for the care and supervision provided.

I am not too certain as to the percentage...if your sister took the child tax credit last year, she can see what the difference would be and then pay you accordingly. I would have to agree w/you in not wanting to get a tax id at this time....

Let's see, when I was paying daycare for twins in 2006, we were only allowed to write off $700.00, a small portion of what we paid for ten months. I don't know what the going rate for childcare is in your area, but maybe you can charge your sister 25% less. After school care at our elementary school now runs $120/week!! ( From 3 p.m. (sometimes 2 p.m.) to 6. Additional monies are owed if it is an inservice day or holiday.

I wish you all the best.

Have fun with the kiddos

I know where we live, you can have one child or 2 siblings you are babysitting without having to be licenced. That said, you would have to file a business tax return and that is probably what you are trying to avoid correct? You don't want to claim this money? I wouldn't recommend doing it under the table but then again, I do most things by the book

Not sure on any percentages. She might talk to her tax professional and have him/her run the numbers for her to see what her credit would be if she had a regular daycare provide service

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She cant claim for the child care tax credit unless you claim it as income. You dont need a tax ID you can use you SS# for the schedule C which is self-employment there is no way around not claiming this money because Sister will need your name and SS # in order to claim the credit on her taxes its been a law for about 10-15 yrs now as many people were skirting it claiming daycare costs when they didnt have them or claiming them and the daycare provider didnt claim the income. Its one of the first things we learned in Tax Class and I used to teach in Tax Class. You will also have to file and pay Self Employment taxes each quarter which will credit towards your Social Security benefits or end up with a surprise at tax time owing money or getting a small reund with penalties for not paying SE taxes.You cant have it both ways her claim and you not its both claim it or dont do daycare for her at all.

I dont make much selling on Ebay, but I claim every little dollar I make, I also claim all my survery money and reward programs money every year I am not going to get caught by the IRS.

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RIP Daddy~ 01/24/1930-06/01/2007 I miss you !
Dont Think you Can .. know you can ~ Jeff Hardy

Child care credit is based on her adjusted gross income, and you state that she makes $75k but is she filing a joint return or individual return?

Here's a link to the IRS on child care credit.

http://www.irs.gov/pub/irs-pdf/p503.pdf

Thanks so much to all of you for your advice... She came over last night and we've decided on $100 per week. She was paying $130 per week, but she won't be able to file the tax credit. On the flip side, the kids will get one-on-one help with homework (and one is dyslexic so could really use extra help) and occasional dinners, I'm sure. Plus, they'll be able to attend after school activities that they haven't previously been able to participate in. I think it will be beneficial for both of us, but we're only doing this on a trial basis (hence the desire to not worry about the tax ID numbers, etc. yet) as I'm not entirely sure it will work. I want to make sure that she doesn't start "having to work late" a lot and my husband is not completely on board as he thinks it will cause problems between my sis and me. Well, we'll see. Thanks again for all your help!

Leaving aside the fact that, legally, not allowed to work up to 18 years, I do not think the babysitting is sick. And if babysitting can be considered a work. Take care of a child or more children is a pleasure. You can do many enjoyable activities with their children. They are nice and with a rich imagination. I do not know if being a babysitter is one whose earnings have necessarily declared. I know that any income should be declared and taxed, but, for example, my sister is employed as a babysitter for my two children. I paid 5$ per hour and I am not interested if she declared the income to be taxed.

Huh???????

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Sounds like one of those spammers again.

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lol, looks like something one of my Kindergarten students would write.

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"When you're drowning, you don't say 'I would be incredibly pleased if someone would have the foresight to notice me drowning and come and help me,' you just scream."

John Lennon