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Will the nanny get a remake?

Do you get the same Tax benefits of a Live-In Nanny if they Live-out?

  • My wife is trying to convince me to get a nanny so whe can go back to work more. She owns her own business and would like to start investing more... She also has the understanding of getting a Nanny has some great tax benefits and that getting a nanny is the same price as Day-Care with a lot more perks... She has some friends that has some Live-in Nannys, but I am opposed to the idea of having a Nanny Live-in. However, I am not opposed to a Live-out nanny. But apparently, it doesn't cover the same tax advantages. I would like to get a girl that lives locally that has a license and can run errands and be more independent vs. someone who barely speaks english, with no license and we feel responsible for their well being. With 2 young kids - that's enough responsibility for me. Can anyone help me understand if the same tax benefits apply for a Live-out nanny?

  • Answer:

    There is no difference in tax treatment of a live-in vs live-out nanny. It's the expense that's the issue, not where the nanny lives. You will save yourself a lot of money if you make a one-hour appointment with someone who knows taxes -- like an accountant. They can show you exactly how much you will save in taxes. You and your wife will be disappointed at how little it is. Your best bet is to ignore the tax benefit. Hiring a nanny is no different from any other product or service. You want the lowest cost commensurate with the service provided. Treat whatever you save in taxes (if anything) as a bonus. But don't let it drive the decision.

Lawrence at Yahoo! Answers Visit the source

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There is no tax advantage to having a nanny live in. Whether you go to a daycare, or a private babysitter, or a live in nanny, these are child care expenses, and they are all treated the same under the income tax act. There is a limit to the claim for child care expenses. Assuming that your children are both under seven years old, the limit to child care expenses is the lesser of a maximum of $14,000, or 2/3 of the earned income of the one of you with the lower income. I agree with you. It's better to have someone licenced rather than a stranger living in your house. Not to mention that if you have a live in, you are normally considered an employer, and would have to pay the payroll taxes as well as her salary.

Sparky

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