Brian and Suzanne Knutson both worked full time, he as an accountant and she as a teacher. Besides employing a sitter to care for their three children, the Knutsons had their home cleaned every week by a house cleaning service, which sent a team of five people to vacuum and dust the residence.
Because the cleaning crew provided no child care, the Tax Court ruled that the IRS correctly determined that the couple ought not to get any child care credit for payments to the cleaning service. It’s immaterial, held the court, that they incurred the outlay while working since they were unable to establish that it enabled them to be employed.
Moreover, the court found nothing persuasive in Brian’s testimony that he and Suzanne were very busy with numerous household improvement projects and programs with the children, her argument that she was unable to work unless someone else took care of the cleaning or the Knutson’s contention that their jobs were so onerous as to leave them with no time for house cleaning.
Rather, hiring the cleaning service made their lives far pleasanter and allowed them to devote their leisure time to upscale pursuits considerably more meaningful than scouring sinks, said a judge insensitive to the travails of two-paycheck couples.
So, which situations are eligible for the child care credit? Well, it’s available when the person requiring care is a spouse or dependent, regardless of their age.
The catch is that the credit is applicable only in cases where the person is “physically or mentally incapable of self-care.”
To qualify, the disability must be severe enough to (1) prevent the individual from dressing or feeding themselves or tending to personal hygiene without the help of someone else or (2) require constant attention and help so the individual will avoid serious injury.
An example: Your grandmother, who otherwise enjoys good health, has an injury that confines her to bed or to a wheelchair. If you must hire someone to care for her while you’re at work, you’re eligible for the credit. Similarly, she’d be considered disabled if she has suicidal or other dangerous tendencies that may require another individual to constantly attend to her.
So while a house cleaning service helps take care of your family, it does not do so in a way that qualifies you for any credits in the eyes of the IRS.
Additional articles. A reminder for accountants who would welcome advice on how to alert clients to tactics that trim taxes for this year and even give a head start for next year: Delve into the archive of my articles (more than 275 and counting).
About Julian Block
Attorney and author Julian Block is frequently quoted in the New York Times, Wall Street Journal, and the Washington Post. He has been cited as “a leading tax professional” (New York Times), an “accomplished writer on taxes” (Wall Street Journal), and “an authority on tax planning” (Financial Planning magazine). More information about his books can be found at julianblocktaxexpert.com.