Daycare Tax Tips

Can providers write off payments to child helpers?

Special rules apply to child helpers under age 18 and under 21

A family child care provider writes:

> It has come up in discussion on my providers list that a provider can pay her child to do daycare tasks and then use that payment as a write-off. Is this true?

For instance....if I have my son keep a notebook of mileage and trips for me, and I pay him to do this task, can I use that as a write off? Currently he has always helped me clean up after daycare and helps clean the toys and such, and I do pay him for this. Can any of it be claimed?

Yes, it is quite permissible to hire your child and deduct the payments as a business expense, but there is some criteria to fulfill.

First of all, the work tasks have to be directly related to the business and not just general chores. (It sounds like your son's work tasks qualify.) You should document the child's assigned tasks, as well as have the child sign in and out or keep a log of work time in some way.

Second of all, you have to treat your son as an employee, though you will save some money under the rules for family employees. Some or all of the normal payroll taxes may not apply. You still have to file all of the normal employee paperwork, however. This includes preparing a Form W-2 at the end of the year.

Hiring your young child or teenager can get a great way to provide them with some deductible spending money.

Last updated 8 July 2013

Posted on 2009-04-17 22:14:03