Do I need DYs Employer Identification Number in order to take advantage of child care tax breaks?
Breedlove and Associates has advised DY as follows: No. Many tax payers are entitled to claim a child care tax credit or utilize a dependent care account in which up to $5,000 salary is tax free. The federal tax identification number used to claim these tax breaks is the household employer’s federal identification number, not DY’s ID number. The purpose of providing the ID number is to inform the IRS who the household employee works for. Since your employee works for you, not DY, the IRS is not seeking DY’s ID number. Clients with a permanent nanny should use their household employment federal tax id number. Clients who did not cross the wage threshold for withholding taxes, do not need a federal tax ID and should use their Social Security number in place of a tax ID (i.e., clients who are household employers, but who are not required to withhold and remit payroll taxes). If an employer pays a nanny illegally, the tax break is unavailable. Please note that the foregoing information has
