I have my mother in law stays with me and i pay all her expenses. Can i pay 1000$ to her for taking care of my 5 year old during some week in summer? I also claim her as dependent on my 1040 form. She doesn't have any other income.
Question: 1) can I claim her as dependent if i just pay her 1000 for year? 2) does she need to file any forms as she got 1000 income for the year? 3) can i claim those money in FSA what i paid her ?
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daw4888
Senior Member
posted: Oct. 29, 2012 @ 12:54p
I am pretty sure that if they are a dependent, then you cant claim a deduction/credit//disbursement from a tax-free fund for childcare.
You can pay her any amount you want. She has to treat is as income. If that income, or other income puts her over the filing limit, then she has to file.
treasurebeacon
Senior Member - 2K
posted: Oct. 29, 2012 @ 1:05p
techwomen said: I have my mother in law stays with me and i pay all her expenses. Can i pay 1000$ to her for taking care of my 5 year old during some week in summer? I also claim her as dependent on my 1040 form. She doesn't have any other income.
Question: 1) can I claim her as dependent if i just pay her 1000 for year? 2) does she need to file any forms as she got 1000 income for the year? 3) can i claim those money in FSA what i paid her ?
techwomen said: ... 3) can i claim those money in FSA what i paid her ?
No. If you claim your mother in law as a dependent then you can not use FSA money to pay her for child care.
anthonyu
Happy Member
posted: Oct. 30, 2012 @ 3:03p
Is there a limit to how much you can claim for dependent care? I saw that it's $3,000 to care for 1 person/child and $6,000 for 2 or more. Does that mean that you can pay your mother-in-law up to $6K (for 2 children) and claim the dependent care deduction instead of claiming her as a dependent and then have her file taxes on that $6K? There should be no income tax on that $6K but she may have to pay self employment tax (Social Security and Medicare).
gaffer
Senior Member
posted: Oct. 30, 2012 @ 4:28p
Dependent care FSA maxes out at $5,000.
jerosen
Geeky member
posted: Oct. 30, 2012 @ 4:48p
There are two different things here.
Dependent care credit has a $6000 limit for married family on expenses you can claim. FSAs have a $5000 limit.
They are separate benefits, you can do one or the other.
gaffer
Senior Member
posted: Oct. 30, 2012 @ 6:05p
Yes, there is the Dependent Care FSA (5,000 max) and the Dependent/Child Care Tax credit. There are online calculators that compare the two, but in most cases, the Dependent Care FSA wins out. Ideally, OP would use the dependent care FSA, but the caregiver is OP's dependent too, so no go.
JW
Senior Member - 1K
posted: Oct. 31, 2012 @ 5:47p
I think we are overlooking something. OP declares her as a dependent. IF her "earnings" exceed half her income support, he looses the dependent deduction. At least that is the way it used to be. I'm not sure what the numbers are, but MIL and OP would be on the hook for Social Security and Medicare taxes / withholding if earning over $300.00 per year. I'm thinking that those additional taxes would really dent any gain from the options OP is looking over.
*** Please allow while the basic comment is on solid ground, it has been a while since I knew the current trigger numbers.
DFW06
Senior Member
posted: Oct. 31, 2012 @ 6:55p
Give her the money as a gift. Be done.
JTausTX
Senior Member
posted: Nov. 1, 2012 @ 8:10a
How old is your MIL? Does she not receive SS?
markkundinger
Senior Member - 2K
posted: Nov. 1, 2012 @ 1:49p
I just researched this a bit for *my* MIL, who is not a dependent (doesn't live with us).
Still can't use a dependent care FSA. That's only for real daycare centers.
Could qualify for child tax credit. Would have to fill out a form 2441 I think.
We'd almost definitely have to give her a W-2 or 1099 for the payments, so she'd have to pay her income taxes on that.
Man, i wish my baby could just get a job and be done with it.
psychtobe
Senior Member - 3K
posted: Nov. 1, 2012 @ 1:54p
we were able to use FSA for a nanny that we household employed. We paid her regularly and paid/witheld all appropriate taxes (FUTA, FICA, state unemployment), and submitted documentation to our employer, who accepted that and paid out the FSA benefit.
markkundinger
Senior Member - 2K
posted: Nov. 1, 2012 @ 4:49p
psychtobe said: we were able to use FSA for a nanny that we household employed. We paid her regularly and paid/witheld all appropriate taxes (FUTA, FICA, state unemployment), and submitted documentation to our employer, who accepted that and paid out the FSA benefit. looks like it's a restriction of just my employer's dependent care FSA, so probably my bad.
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