Ask An Expert
Do you claim cash paid for babysitting on your income tax?
Expert: John R Mott
Ali asked:
If you get paid cash to babysit in your home do you claim it on your income tax? And if the mother of the children requests a receipt how do you go about it?
John R Mott answered:
If you get paid for providing babysitting services, that represents income from self-employment and should be reported on your tax return. Whether you get paid by cash or cheque does not matter.
If your client is requesting a receipt, it is probably because she wishes to claim the expense as an eligible childcare deduction on her tax return. The Canada Revenue Agency routinely demands taxpayers to submit receipts to support this deduction.
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To be valid for the childcare deduction, your receipt should include the following information:
- the date
- your name and address;
- your social insurance number;
- a description of the service provided (i.e. babysitting services)
- the date(s) the service was provided;
- the full name of the child being cared for;
- the amount of your fee;
- confirmation of payment (e.g. "Payment received in full from client name.")
If you expect to provide babysitting services on a recurring basis, you would do well to purchase a Receipt Book from your local stationery store -- the kind that provides a tear-away copy for the client and leaves a carbon copy for you. This book will create a primary accounting record of your business activity and make it easier for you at tax time.
About the author
John Mott is a chartered accountant and tax specialist with a private practice in mid-town Toronto. He provides tax, accounting and advisory services to individuals and small businesses. He may be visited online at: johnmott.com.
