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Dave CPA
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with a nanny as my (1) employee how do i claim her health insurance

Resolved Question:

with a nanny as my (1) employee how do i claim her health insurance cost on my income tax return
Submitted: 5 years ago.
Category: Tax
Expert:  Dave CPA replied 5 years ago.



Welcome to Just Answer,


A nanny provides childcare and is a contributing member of a household, not a business. Business owners may directly deduct wages, payroll taxes, and certain benefits provided for the businesses' employees from their business income. Families do not have the ability to do the same on their personal income tax return. A family may only use the "Child and Dependant Care Tax Credit" or the "Dependent Care Flexible Spending Account" to use nanny expenses to reduce their income taxes.


So if your place of work doesn't off the flex account, you should go with the first option.


I have provided a link below on each topic for your reference from the IRS.


I hope this clarifies your question. Regards,

Customer: replied 5 years ago.
Thank you for your information. However, I am looking at General Business Credit form 3800, and credit for small employer
health insurance premiums form 8941. I paid over $5000 for my employee's insurance last year. A credit should be entered on line 53 form 1040. Am I wrong? The annual wage paid to my employee amounted to $28,800, and form 8941 line 7 says
Expert:  Dave CPA replied 5 years ago.

Sorry your are correct. After I did some research the specific item you addressed would be reported on 8941 and then to 3800, which in turn goes to line 53 of the 1040. I have enclosed the instructions for both. You can refer to page 3 of the instructions of 8941 for the topic of health insurance.

There is a phase out of the credit for wages paid over $25,000 and this is discussed on page 3 as well.
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