Hello My name is Soffia and I make 28,000 a year I have a boyfriend and 2 kids that live with me a 10 year old girl and 5 year old boy. My boyfriend does not work. I have 3 dependents my 2 kids and myself. My boyfriends grandmother watches my children 3 days a week I pay her 50 Dollars a week. I wanted to claim her in my taxes as a childcare expense. IM afraid because my boyfriends grandmother owns a house along with her husband. SHe has never worked before so I doubt she filed any income taxes before her husband has worked for about 30 years and collects a pension. I would like to know If I claim my boyfriends grandmother will she get into any kind of trouble because she owns a home I mean audit or anything. She has never worked, or probably claimed taxes but she does own a home and collects a little social security I guess because of her husband working all those years.



THank You
Soffia

Soffia:

If you claim the child care credit, you must provide the name, address and SSN of the person providing the care.

That person, in turn, must claim the income as self-employment income on Schedule C.

Since we are talking about $2,600 in annual income, it is likely that she will owe a minimal amount of self-employment taxes (at most $400), and probably less because she will be able to deduct certain expenses she incurred while caring for your children, such as business use of the home, food costs and some mileage expenses.

I suggest you discuss this with her before you file.

If you want, I can do some modeling for you (for a small fee) to determine how the Child Tax Credit will affect your return and how the extra income will affect her return.

Email me if you are interested.