Can I deduct the cost of a nanny as a 1099 contractor with unpredictable hours?

You've got a couple options here! The Child and Dependent Care Credit is definitely available to 1099 contractors - your employment status doesn't matter for claiming this credit. The key requirement is that you need childcare to allow you to work or look for work. For 2025 filing, you can claim expenses up to $3,000 for one child or $6,000 for two or more children. The credit percentage ranges from 20% to 35% depending on your income. So even with your existing daycare costs, these additional nanny hours could potentially qualify too. Since you're self-employed, you'll want to maintain excellent records - dates, hours, and payments, along with the nanny's SSN or tax ID. You'll need to file Form 2441 with your return. One important note: if you use a Dependent Care FSA through any employer, you'll need to coordinate that with this credit as expenses can't be double-counted.

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Just to add another perspective - I'm a CPA who works with many 1099 contractors. Here's the simple breakdown: 1. Childcare expenses are NEVER a business deduction on Schedule C. They don't directly relate to your business operations. 2. However, childcare expenses CAN qualify for the Child and Dependent Care Credit using Form 2441, regardless of whether you're a W-2 employee or 1099 contractor. 3. For 2025, the maximum expenses you can claim are $3,000 for one child or $6,000 for two or more. 4. Both formal daycare and nannies/au pairs can qualify as long as they have a tax ID or SSN you can report. 5. Keep immaculate records - dates, times, payments, receipts, and provider tax info. Hope this clarifies things!

Has anyone actually gotten audited on this? I've been claiming both regular daycare and my evening babysitter on my taxes for years and sometimes worry I'm doing it wrong.

I'm in a similar boat as a 1099 graphic designer with clients in different time zones - my work hours are all over the place! One thing I learned the hard way is to keep a detailed log of not just the childcare payments, but also your work hours that correspond to when you needed the care. I use a simple spreadsheet that tracks: date, work hours (including which client/project), childcare provider, hours of care, and amount paid. This has been super helpful because it clearly shows the IRS that the childcare was necessary for you to work those specific hours. Also, don't forget that if you're paying your nanny more than $2,400 per year, you'll likely need to deal with household employee taxes (Social Security, Medicare, etc.). It's a pain, but worth staying compliant to avoid bigger headaches later!