Is an Au Pair Tax-Deductible?

Approximately 12,000 families with working parents enlist the help of an au pair to care for their children. An au pair is a foreign nanny between the ages of 18 and 26 who watches a family's children in exchange for room and board and a cash stipend tied to the U.S. minimum wage. Fortunately, the Internal Revenue Service allows taxpayers to report child care expenses as a tax deduction, including a portion of the money paid to an au pair.

Child and Dependent Care Credit

You may be able to claim the child and dependent care credit if you have one or more children under age 13 and have paid child care expenses while you were working or looking for work.

Marital Status

You must consider your marital status when filing for taxes. If you are married, you must file jointly to take advantage of the child care credit. If you are divorced or legally separated, only the parent who had the children more than six months of the year and paid for child care in order to work can write off a portion of the au pair's salary. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child, explains IRS.gov.

How Much You Can Deduct

You can deduct up to 35 percent of your qualifying expenses, depending upon your adjusted gross income. The expenses qualifying for the credit must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from gross income. The total expenses qualifying for the credit are capped at $3,000 for one qualifying child or $6,000 for two or more qualifying children.

Form 2411

You'll be required to file Form 2411 along with your Form 1040. You will be asked to record your au pair's personal information, including name, address, tax identification number as applicable and salary, along with your child or children's names, Social Security numbers and expenses incurred. You must attach this to Form 1040 when you file. If any questions arise during the process, reach out to an accountant to assist with accurate calculations and maximize your tax credits.

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