Are these child-care expenses deductible

I work full-time. My wife's primary job is caring for our children. In addition to that, she is working on a novel, which is currently in the stage of being edited for submission to agents and, eventually, publishers. She sincerely intends to get the novel published, and in that endeavor she is being assisted by a friend who is a copy editor and another friend who is a successful, published novelist (I would drop names, but that's just so gauche :-). Neither the copy editor nor the novelist is accepting payment for her assistance.

Because my wife's child-care responsibilities do not leave her enough time to do the work she needs to do on her novel, and because I don't have enough free time from work to be able to care for the children for enough hours for my wife to do her work, we had to hire a babysitter.

The babysitter comes four days per week -- two afternoons and two evenings. The evenings are specifically designated as "writing nights," and my wife leaves the house while the babysitter is in it and goes off somewhere and works on her novel.

We were specifically advised to take this approach by my wife's novelist friend, who set some strict deadlines on my wife's progress on her novel as a condition of being willing to assist her with acquiring acquiring an agent and getting the book published.

We would not have hired the babysitter if my wife weren't doing the writing nights.

Given all those details, my question is, is the cost of the babysitter for the writing nights deductible as an employment-related child-care expense? I'm guessing the answer is no, but I thought it a good idea to ask.

If not, is the cost deductible as a business expense, where the business is my wife's attempt to get her novel published and make some money from it? If so, then obviously there is not yet any income from which to deduct the expense; can it be carried forward until such time as my wife actually makes some money off of all her work?

Thanks for any advice you can provide.

Jonathan Kamens

Reply to
Jonathan Kamens
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"Jonathan Kamens" wrote

Probably it would.....but: The deduction is limited to the lower of your income, her income, or the amount paid for child care so you both could work.

If your income from writing is $0 this year, then the child care credit is also, zero.

No. child care is a personal cost and would not be allowed as a business expense.

As a suggestion, hire a local CPA or EA that is familiar with writers and their tax specific quirks. Your wife's friends in the writing busines might have suggestions for who you should be talking to.

Reply to
paulthomascpa

How can the expense be deductible? It probably qualifies for the dependent care credit, but is not deductible as a business expense or un-reimbursed employee expense, which was the original question.

That might not be true. Publication 503 says that if the spouse was working or going to school during a month, her monthly income for that month, for the purposes of the dependent care credit, is the larger of $250 or her actual salary for that month. The original post mentioned the word "children", so replace $250 with $500.

Student-spouse or spouse not able to care for self. Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more.

Spouse works. If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month.

Finally, if you hire a babysitter, are you on the hook for the employer portion of FICA tax, state unemployment, FUTA, and state disability. In other words, is a babysitter considered a nanny?

Reply to
removeps-groups

I take the first of his questions to mean the child care credit, because then he asks "is the cost deductible as a business expense", which is what leads me to believe he was initially referring to the child care credit.

Reply to
paulthomascpa

I'd see publication 503

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references to 'work' indicate there must be net money earned by that work. I wish her well on the writing, and look forward to the book signing tour!

JoeTaxpayer

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Reply to
JoeTaxpayer

I misspoke. My question was, in fact, intended to be about the dependent care credit. Not ever having taken it before, I forgot that it's a credit, not a deduction.

OK, so looking for work doesn't count if you don't end up making any income for the entire year.

What this leaves ambiguous is this: What if you are work>> As a suggestion, hire a local CPA or EA that is familiar with writers and

It is difficult to justify paying a CPA or EA for advice on how to handle the $0 in income my wife has earned from her work so far.

Yes, if you pay the babysitter enough (I believe the Federal threshold is $1,500 per year or $1,000 per quarter, although I could be remembering incorrectly). See my other recent posting on this topic about all the red tape we've had to deal with to employ a babysitter for 11 hours per week.

Reply to
Jonathan Kamens

Maybe she can ask for an advance of royalties -- precisely $6000.

Strangely, the law at

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not mention anything about looking for work, or maybe I justmissed it.

I tried to look for revenue rulings on the dependent care credit but didn't come up with anything.

Reply to
removeps-groups

That would work if she had an agent, a publisher, and a commitment to publish the novel when she's done with it. She has none of these. With any luck, in a few months she'll have the first.

Breaking into the book business is a long process. Most people who try it, fail. Of COURSE my wife will be successful :-), but it still takes time.

Reply to
Jonathan Kamens

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