Tax law gives you two possible ways to qualify for a tax refund when you pay a nanny:

the credit for child and dependent care expenses (often called the “child care credit”), and

the exclusion from gross income for dependent care assistance.

As you know from last month’s article titled “Nanny Tax Compliance Avoids Payroll Tax Problems,” the nanny tax is nothing more than payroll taxes. Since you have to pay the payroll tax, this article gives you the other side that can ... Log in to view full article.