day care income

[liberty]

Client had his mom watch their child after school and paid her money. His mom did not care for other child, only her grandchild. If client wants to get child care credit, then grandma will have to report the payment as income. I am confortable to report that income as other income, not on schedule C. What do you think?

[TaxGuyBill]

If client wants to get child care credit, then grandma will have to report the payment as income.

No, grandma needs to report payments for services regardless if client claims a credit or not.

I am confortable to report that income as other income, not on schedule C. What do you think?

If grandma watches the child in the client's home, grandma might be a "Household Employee". Otherwise, yes, I agree. Only watching your grandchildren is rarely, if ever, a "business" on Schedule C. "Other income" would be correct.

[TAXNJ]

Client had his mom watch their child after school and paid her money. His mom did not care for other child, only her grandchild. If client wants to get child care credit, then grandma will have to report the payment as income. I am confortable to report that income as other income, not on schedule C. What do you think?

You consider reading the flow chart “Child and Dependent Care Credit Eligibility” 11-5 in The Tax Book.