Childcare- Au Pair and Taxes

What is an "Au Pair"?

"Au Pair" is commonly referred to in the United States as a person who lives in another's home and provides child care functions. This is a temporary arrangement. Usually, an au pair would be admitted into the states on a J-1 visa and cannot stay longer than one year.

What are the requirements?

The individual must be between the ages of 18-26. Au pairs would stay with the host family that they are providing child care for. They must be provided a private bedroom, a full weekend off per month, two weeks paid vacation, up to $500 to attend an institution of higher education, and a cash stipend. The current rate is $195.75 (which does not include to room and board).

How is this set-up treated from a tax standpoint?

Because au pair wages are paid for domestic services in a private home, they are not subject to income tax withholding and reporting on payroll forms (Form 941/W-2). However, the wages would be included in gross income of the au pair and the individual would need to file a US tax return.

Depending on the au pair status, the host family may be liable to pay the Federal Unemployment Taxes (FUTA). If the au pair is a nonresident alien, the host family may be exempt from this as well.

Can the host family still claim child care and dependent credits?

Yes. Be sure to get your au pair's tax ID number and their full name so that you can claim the child and dependent care  credit on your tax return. This is even more important if your employer reimburses you for child care. The reimbursement is shown on your W-2 and there must be childcare reported in at least the amount of the reimbursement for it to not be taxable.

If you have questions regarding au pairs, please contact us.