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.
Deductibility of Au Pairs
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. 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.
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.
Important Filing Status Exceptions
You must consider your marital status when filing for au pair 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. If you're using a piece of software like Turbotax au pair taxes will flag this form you.
2018 Tax Changes
The Tax Cuts and Jobs Act brings good news for parents filing the Child Care Tax Credit. The amount has been increased by $1,000 to $2,000 per qualifying child.
2017 Tax Filings
Although the tax brackets have improved for many taxpayers starting in 2018, au pairs will actually benefit from the personal exemptions and nonresident deductions that were in place in 2017. For parents filing for 2017, though, the lower Child Care Tax Credit and standard deductions may not make up for the fact that they can claim personal exemptions on their 2017 taxes. The au pair may want to get a cultural care EIN in order to provide you with the information you need for tax filing purposes.
- IRS.gov: Au Pairs
- IRS.gov: Child and Dependent Care Credit
- IRS.gov: Form 2411: Child and Dependent Care Expenses
- IRS: Au Pairs
- Efile: Tax Credit for Child and Dependent Care Expenses
- 1040NR: 2018 TCJA vs. 2017 Tax Code: Case Study Comparisons, by Jean Mammen, EA
- Journal of Accountancy: Child tax credit now higher, more widely available
Renee Morad is a writer based in New Jersey. Her work has been published in "Smart Money Magazine," "Self Magazine," "The New York Times," Xfinity.com and other publications.