30

I feel like you're getting overwhelmed with all of the variables and possible scenarios and are trying too hard to optimize your taxes and budget. I would suggest simplifying things and not trying to polish too much. When expecting a child or any other significant life changing event, it is often wise (and helpful emotionally) to save up as much cash as ...


15

The bottom line is that children are expensive. It is highly unlikely that you will recoup a significant costs of having children through tax savings. While many parents go overboard on spending, finding a high quality day care is necessary. Skimping too much on day care is not worth the cost savings. To further complicate matters, most high quality day ...


9

First thing, it's scary having your first but you'll work it out. Just breathe. The good news is that you can afford daycare! You will even have money left over at the end of the month so you can buy diapers. This is not a terrible position to be in. You just need to figure out some ways to save money. If your job and/or wife's job offer dependent-care ...


6

Is this the kind of thing to send an amended tax return over? No. If the error didn't result in more credit, it's because you've already gotten the maximum credit/benefit available to you. The IRS does indicate that people should file an amended return if they didn't claim the correct filing status or they need to change their income, deductions, or credits....


5

They're not deductible, but you can receive tax credit for these expenses. See the IRS publication 503 on the matter. The credit is up to $3K for one child or up to $6K for more than one child, provided both parents work and have earned income, and the credit doesn't exceed the actual un-reimbursed expenses/limits. Read the pub for the full details and ...


4

You have two choices depending on your exact situation you might use either: the tax-credit or the flexible spending account (FSA). You can't use both unless more than one child in involved. The first thing to determine is if your company ha the flexible spending account for dependent care. If they do and you want to use it you either signup during open ...


4

Is it possible not to include the SSN, but her name/address? No. Similar to how the hospitals now get you a social security number for your newborn, so you can leave with a little crying tax deduction, the IRS has cracked down on FSA reimbursements. They expect to be able to follow the money from your tax deduction to a nanny/sitter's income. Your last ...


3

You have two options for deducting childcare expenses in the US. Both are discussed in Publication 503. You can claim the Childcare Tax Credit using Form 2441, which has instructions here. First, you can enroll in a dependent care FSA. You enroll in this through your employer; either you or your spouse can. $5000 can be deducted pre-tax from your ...


3

As the funds are Gift received from your parents, and your tax residency is US, as per US gift tax, there is no tax due from you for these funds.


3

Whether to employ a payroll service to handle the taxes (and possibly the payroll itself) is a matter that depends on how savvy you are with respect to your own taxes and with using computers in general. If you are comfortable using programs such as Excel, or Quicken, or TurboTax, or TaxAct etc, then taking care of payroll taxes on a nanny's wages all by ...


3

For Federal Return, Schedule H and its Instructions are a great start. You are the nanny's employer, and are responsible for FICA (social security and medicare) withholding, and also paying the employer portion. You will offer her a W4 so she can tell you how much federal and state tax to withhold. You'll use Circular E the employer's tax guide to ...


2

In terms of the differences between the Dependent Care FSA and the Childcare Tax Credit, the general advice is that the FSA is the better choice where it is available, because it allows you to avoid paying FICA and Social Security taxes on the income excluded in this manner. Of course, if you are unable to use the FSA because it is not available through ...


2

Generally speaking, child care expenses are deductible on the tax return of the spouse with the lower net income, and at your income level, a $2400 deduction would be worth a reduction in taxes of $600, on your 2011 tax return. So if you'd like to reduce your taxes by $600, do ask for that receipt – and yes, a receipt is required. Refer to Canada ...


2

Yes, you are correct in estimating how much you would save on your federal and provincial income taxes. You could also consider any other government benefits which may increase as the child care receipts will reduce your family net income which is what many are based on. These would include working income tax benefit, GST credit, medical tax credit, and ...


2

Daycare is definitely expensive - and it sort of has to be, when you think about it; particularly at the infant age, you need one caretaker per 3 children, meaning you're paying at least 1/3 of a person's salary (plus employment taxes), plus the other costs of the daycare (administrative staff, building, consumables, furniture upkeep, etc.), plus some ...


1

There are tax benefits that somewhat offset the costs, but they're fairly small: Exemptions (line 42 on 1040). You can subtract $4050 (2016; may differ in future) per dependent in computing your taxable income. This will translate into a reduction in tax of $1000-1300 for most people. Child tax credit (line 52). Each child reduces your tax amount by $1000. ...


1

This is probably more of a long comment than an answer, but here we go. Have you called your employer's FSA administrator? What will matter here, almost more than what the IRS says is allowed, will be what a claims processor at the administrator will approve. Dependent care, transit and parking FSAs are pretty different from medical FSAs because they ...


1

There is no difference because CESG grants are calculated using family income, the sum of both your salaries. This link explains it. If your net family income is lower than 44,701$ the CESG grants are more generous; a 500$ for CLB is added plus 100$ per year. Some conditions apply naturally. For maximum return, open CESG before your daughter turns 7 years ...


1

The question needs to be put in the context of both your tax situations. You are allowed to financially support your parent living in your home. And you can then claim an exemption for her as a dependant based on the fact that she is your mother and you pay more than half her upkeep. To calculate this, consider the value of food and housing you supply and ...


1

Here's an answer received elsewhere. Yes, it looks like you have a pretty good understanding the concept and the process. Your wife's income will be so low - why? If she is a full-time student in any of those months, you may attribute $250 x 2 children worth of income for each of those months. Incidentally, even if you do end up paying ...


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