Did you know that paying your babysitter could be a tax-advantaged expense? For millions of working families, babysitting isn’t just a necessity—it’s a lifeline. Whether you're covering a work shift, commuting, or simply managing school closures and evening meetings, the help of a trusted sitter is invaluable.
But here’s the big secret most families don’t realize: Babysitting can qualify for both Dependent Care Flexible Spending Account (DCFSA) reimbursements and the federal Dependent Care Tax Credit (DCTC). The problem? Very few families take advantage of these tax-saving opportunities when it comes to informal babysitting arrangements.
In this post, we’ll explore why babysitting is an eligible expense, why it's so underutilized for tax savings, the compliance challenges families face (especially when paying sitters under the table), and how a platform like SitterSync can help.
The IRS allows families to receive tax benefits for childcare expenses that are necessary for the parents or guardians to work or actively look for work. That includes:
Daycare centers
Preschool and nursery school
After-school programs
Babysitters, nannies, and other informal care providers
That last category is where things get interesting.
You don’t need to use a daycare center or a professional childcare organization to be eligible for DCFSA reimbursements or the childcare tax credit. A babysitter—whether they’re part-time, full-time, or just helping out during work hours—can qualify as long as they meet certain criteria. But unfortunately, this benefit is often overlooked.
There are a few reasons babysitting often gets left out of tax filings, and they all boil down to two things: awareness and compliance.
Many families assume that DCFSA funds or the child care tax credit only apply to licensed providers or daycare centers. The IRS guidelines, however, are broader. As long as your babysitter is not your spouse, your dependent, or the child’s parent (and they are over 18), you may be able to claim their services.
The truth is, that many families pay babysitters in cash or via apps like Venmo without keeping receipts or official records. While this is convenient, it makes it virtually impossible to claim tax benefits later.
Without proper documentation, the IRS won’t allow the expenses to qualify for either DCFSA reimbursement or the Dependent Care Credit.
Even for families who want to “do it right,” the process can be daunting. You might need to:
Collect the babysitter’s legal name, address, and SSN or Tax ID
Provide a Form 1099-NEC (if the sitter is considered an independent contractor)
Fill out IRS Form 2441 when filing your taxes
Track and categorize every childcare payment
Prove that care was needed so the parents could work
All of this can feel like more work than it’s worth—especially when you’re already juggling parenting, work, and everything else life throws your way.
Let’s talk about this common challenge: Paying sitters under the table.
It’s simple, right? You Venmo your sitter $40 for after-school help. No receipts. No tax documents. No complications.
But here’s the issue: those expenses are now ineligible for tax benefits. You can’t claim DCFSA reimbursements. You can’t apply them to the childcare tax credit. You might even be risking noncompliance if your sitter ends up filing taxes and your numbers don’t match.
If you pay above board—through a traceable method with clear documentation—your payments become compliant. That opens the door to:
DCFSA reimbursements (shield income from taxes for up to $5,000 per year in childcare expenses)
The Child and Dependent Care Tax Credit (up to $1,050 credit for one child, or up to $2,100 credit for two or more children, depending on your income)
When tax season rolls around, families who want to claim their babysitting expenses must fill out IRS Form 2441: Child and Dependent Care Expenses.
To do this, you’ll need:
Your sitter’s name, address, and Taxpayer Identification Number (TIN or SSN)
The total amount paid during the year
Proof that care was provided so you could work or look for work
If your sitter earned more than $600 in a calendar year, you may also need to issue a 1099-NEC to them by January 31 and report that to the IRS. This form tells the government how much you paid an independent contractor. If you go this route, the sitter must file that income on their taxes.
Here’s the good news: sitters can still qualify as independent contractors if they work for multiple families, set their own schedules, and aren’t treated as your household employees. But most families aren’t sure how to handle this—which is why they avoid filing altogether.
Let’s break down the most common barriers parents face when trying to properly file babysitting expenses for tax purposes:
Many families feel uncomfortable asking a babysitter for their SSN or home address. According to the IRS, you are required to make a reasonable effort to obtain the babysitter’s information (including their name, address, and Taxpayer Identification Number—usually a Social Security Number).
So in practice:
Yes, you need to ask for the sitter's info.
If they refuse, you should document your request (e.g., in writing, email, or even a text).
You can write “Refused” in the SSN/TIN field on Form 2441, and attach a short explanation if necessary.
When you pay in cash, or through multiple apps without record-keeping, it’s easy to lose track of how much you’ve paid over the course of a year.
Parents are worried that if they file incorrectly, they’ll trigger an audit or hurt their babysitter’s tax situation.
Parents are already overwhelmed with parenting, work, and life. The idea of managing tax forms, tracking receipts, and calculating dependent care expenses is often just too much.
This is where SitterSync comes in.
SitterSync is a platform that makes it easy for families to:
SitterSync gives families a single place to record and track payments made to trusted sitters—whether it's a regular nanny or an occasional evening sitter.
Every payment made through SitterSync comes with a compliant receipt, so families can submit them to their employer’s Dependent Care FSA administrator with confidence.
SitterSync integrates with Stripe Connect payments and automatically sends out 1099-Ks to sitters who earn more than $600 in a year. The sitter receives the form directly, and the family stays in compliance.
When it’s time to fill out Form 2441, families can download a pre-filled tax report with all the necessary data from SitterSync . They can hand it directly to their CPA or plug it into their tax software to help complete the 2441.
Most families don’t need help finding sitters—they just want to pay the people they already trust. SitterSync respects those personal networks and empowers families to manage payments and taxes for their existing caregivers—not a marketplace of strangers.
If you’re a working parent, chances are you’re already paying for child care—and babysitting is a big part of that. But if you’re paying sitters under the table, not tracking your expenses, or avoiding tax filing out of fear, you’re probably leaving hundreds or even thousands of dollars on the table every year.
Tax-advantaged benefits like the DCFSA and Dependent Care Credit are designed to ease the burden of child care, and yes—they apply to babysitters.
SitterSync was built to help families like yours take full advantage of these benefits.
By using SitterSync, you can:
Track and manage payments
Generate compliant receipts
Automate tax reporting
Simplify the filing process
Put real dollars back in your pocket
It’s time to make babysitting work for you—not just in your daily life, but at tax time too.
Want to learn how SitterSync can help your family?
Visit www.sittersync.com to get started today.