U.S. tax law allows you to claim some costs related to children and dependents as a tax credit where the expenditure makes it possible for the taxpayer to work or look for work. These costs include expenses related to household services such as hiring a housekeeper. Exactly what part of these expenses is claimable depends on the duties of the worker.
Context
The definition "use of household services" appears in the IRS rules governing a tax credit for child and dependent care expenses. This tax credit is available to eligible individuals completing forms 1040, 1040A or 1040NR. Somebody claiming this tax credit cannot complete the simplified forms 1040EZ or 1040NR-EZ.
Claiming this credit requires a wide range of criteria to be met. The "use of household services" test merely governs whether a particular type of spending counts as a work-related expense. This means that the spending both helps benefit a child or dependent, and that the spending allows the taxpayer more time to either work or look for work.
Covered Jobs
Household services means paying somebody to carry out "ordinary and usual services" needed to run a home. The IRS gives the example of a cook, housekeeper or maid as qualifying, but a bartender, chauffeur or gardener are not qualifying.
Workers with Other Duties
If the worker carries out a substantial amount of duties that do not benefit the child or dependent, the taxpayer must divide the worker's total pay proportionally to calculate the amount that can be claimed as a taxpayer.
This is not necessary if the other duties only make up a small proportion of the total work. With work that benefits both the child or dependent and other family members, such as cooking a family meal, the relevant expenses can still count toward the tax credit in full.
Expenses and Taxes
The cost of meals provided for a worker providing household services are included in the total expenses claimed as a tax credit. If the worker resides in the house, the taxpayer can claim any expenses that are specifically related to that residence, such as increased utility bills. Any taxes the employer has to pay that specifically relate to the worker's employment are also claimable toward the tax credit.
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