February 22, 2013
Paying taxes tends to invoke negative feelings for most people. Fortunately for household employers, there’s a silver lining on your gray tax cloud – tax breaks. As long as you and your spouse are working or are a full-time student and have at least one child under 13, you’re in a great position to make back most, if not all, of your nanny taxes. Here are two ways you can save:
1) Dependent Care Flexible Spending Account. Many companies offer their employees the option to set aside up to $5,000 of their pre-tax earnings into a Dependent Care Account to pay for childcare expenses. This means there is no federal or state income tax, Social Security tax or Medicare tax on $5,000 of either you or your spouse’s income. Depending on your state and your tax bracket, this deduction will save you anywhere from $2,000 to $2,300 per year.
2) Child Care Tax Credit. If you don’t have access to a Dependent Care Account, you can claim the Tax Credit for Child or Dependent Care (IRS Form 2441) on your federal income tax return at year end. If you have one child, you can save up to $600 per year (20% on up to $3,000 in childcare expenses). If you have two or more children, your savings will be up to $1,200 per year (20% on up to $6,000 in childcare expenses).
Great News! If you have two or more children under the age of 13, you can use a combination of these two tax breaks in order to achieve a maximum of $2,500 in tax savings.
For many families, the tax breaks will offset a large portion of the employer tax costs. This is especially true for those employing someone on a part-time, seasonal or NannyShare basis. For a more fine-tuned estimate of how much your family can save from tax breaks, use the free Nanny Tax Calculator at www.breedlove.com.
October 11, 2012
We're proud to be members and supporters of APNA, the Association of Premier Nanny Agencies (www.theapna.org). APNA is an alliance of many of the best full-service staffing agencies in the U.S. -- boutique, high-quality firms who work extremely hard for families and nannies. They come together on their own nickel to create standards (in an unregulated industry) and share ideas and best practices for the betterment of the in-home care industry and the well-being of our children. It's an inspiring group and we can't wait to get to DC for the annual conference!
October 11, 2011
With the tough economy, many families are considering a NannyShare or CareShare arrangement as a way to save money. There's no doubt about it, it's a great way to make childcare much more affordable.
But, there are some special legal and tax considerations both families should be aware of before you get started. To save money and eliminate risk, visit our Expert Advice page on NannyShares.