in-home daycare provider (nanny)

[Guest aearle]

I have read Publication 503, but still would appreciate any clarity that can be provided with regard to individuals who have a babysitter/nanny come to their home every day to care for their dependents (under age 13) and want to claim these expenses through their dependent care FSA. I have always been under the impression that such expenses would be eligible, but can't seem to find anything to support my assumption. My assumption is that the following are all eligible expenses under Section 129:

1) Care provided at a qualified day care center

2) Care provided outside of the home (like a neighbor's home), as long as the person is claiming the payment as income

3) Care provided inside the home, as long as the person is claiming the payment as income

4) Care provided by a family member age 19 or over, as long as they are not a tax dependent

5) Summer day camp

Am I incorrect about #3??

Thanks!

[jpod]

You need to report the nanny's social security number on your tax return, but beyond that it doesn't matter TO YOU whether the nanny reports the money as income. However, be aware that you are required to withhold and deposit FICA/Medicare taxes and prepare a W-2. (Remember "Nannygate"?)