First on the child care tax benefit menu is the dependent and child care tax credit, which reduces the amount of federal income tax you owe. If you paid a qualified caregiver or daycare center to tend a young child so you could work or look for work, you likely can claim the child care tax credit.
Next benefit: the child tax credit, which can reduce your family's tax bill by $1,000 for each minor child who qualifies. But first, you must meet all the tests and income limits. Learn how it works from this quick and dirty explanation.
One of the most well known child tax benefits is the dependent tax deduction. It's so popular that some expectant mothers whose due date fell at the beginning of the year have induced labor in late December in order to qualify!
This provision of the U.S. tax code can indeed reduce the amount of taxes you owe, if you qualify. Here's how the dependent tax deduction works.
It may not seem like a benefit, but paying the nanny tax is not only the law, it will help provide for your babysitter when it comes time to collect Medicare and Social Security. Just do it! I promise, it's not as hard as you think.
If you want to ease into it, start by figuring out if you owe nanny taxes to the U.S. government.