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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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My husband and I own our own business (S-Corp). We work out

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My husband and I own our own business (S-Corp). We work out of our home and are going to hire someone to watch our children part-time so that we can work. Can our company hire the person to watch our children in our home? And can the company take a tax deduction for this expense? Is there a better way for us to handle this to maximize tax benefits?

LEV :

Hi and welcome to Just Answer!
Your S-corporation may hire someone to watch your children and pay all required employment taxes.
However these expenses are not considered business expenses because they are not related to your business - but rather your personal expenses.


Benefits of using your S-corporation – that all employment taxes are handled together with minimal overhead. But there is no tax saving for providing payments via the S-corporation.
Your S-corporation should treat all expenses for having someone watching your children as your wages and in additional should report them on your W2 forms. Your wages are deductible for the S-corporation.
You will be able to deduct child care expenses on your own tax return - on the form 2441 - www.irs.gov/pub/irs-pdf/f2441.pdf

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