You can claim child care expenses paid under the table, as long as you can name the person you paid, give their address, and report their taxpayer identification number on your return. The IRS does not care whether the money moved by check, app, or cash. What it cares about is that a real provider gave real care so you could work, and that you can identify that provider on Form 2441. The complication with off-the-books arrangements is not the cash itself. It is that providers working off the books often don’t want to hand over a Social Security number.
What “Under the Table” Actually Changes
Nothing in the Child and Dependent Care Credit rules requires a particular payment method. The federal credit covers up to $3,000 in expenses for one qualifying person or $6,000 for two or more, at a credit rate that ranges from 20% to 50% depending on your adjusted gross income.1Office of the Law Revision Counsel. 26 U.S. Code 21 – Expenses for Household and Dependent Care Services Necessary for Gainful Employment You (and your spouse if you’re married) must have earned income, and the care must have been for a child under 13 or a spouse or dependent who can’t care for themselves.2Internal Revenue Service. Publication 503, Child and Dependent Care Expenses
Cash payments meet the rule. What changes when you pay under the table is downstream: your provider may not be reporting the income, may refuse to share a TIN, and may not want a paper trail. Each of those creates a documentation problem for you, not a legal bar to the credit.
Who You’re Allowed to Pay
Most caregivers qualify, but a few relationships disqualify the payment no matter how much you paid. You cannot claim the credit for money paid to your spouse, to the parent of the child being cared for (when the child is under 13), to a child of yours who is under 19 at the end of the year, or to anyone you claim as a dependent. A grandparent who isn’t your dependent, an aunt, an adult sibling, or your own 19-or-older child are all eligible providers.2Internal Revenue Service. Publication 503, Child and Dependent Care Expenses
What You Must Report About the Provider
On Form 2441, which you attach to your Form 1040, Part I asks for each provider’s name, complete address, and taxpayer identification number.3Internal Revenue Service. Form 2441 – Child and Dependent Care Expenses For an individual sitter or nanny, the TIN is a Social Security number. For a daycare business, it’s an EIN. There is room for three providers; use an attached statement if you had more.4Internal Revenue Service. Instructions for Form 2441
The provider is legally required to give you this information when you ask, and can be penalized $50 for each refusal.5Internal Revenue Service. 20.1.7 Information Return Penalties Enforcement against individual caregivers is uncommon, so the practical burden lands on you.
If the Provider Won’t Share a Social Security Number
This is the usual sticking point with under-the-table arrangements. A caregiver who isn’t reporting the income doesn’t want their SSN on a tax return. You can still claim the credit if you show “due diligence” — a real, documented attempt to get the information.
Start by handing the provider IRS Form W-10, a one-page form built for exactly this request.6Internal Revenue Service. Form W-10 – Dependent Care Provider’s Identification and Certification Ask them to complete and sign it. If they refuse, keep the form anyway, along with a dated record of when and how you asked. Other documentation the IRS will accept in place of a completed W-10 includes a copy of the provider’s Social Security card, a completed Form W-4 if they’re your household employee, or an invoice or letterhead showing their name, address, and TIN.2Internal Revenue Service. Publication 503, Child and Dependent Care Expenses
When you file Form 2441 without a TIN, enter the provider’s name and address, write “See Attached Statement” where the TIN goes, and attach a statement describing the steps you took and the provider’s refusal. Save texts, emails, and any written requests. Contemporaneous notes carry more weight than anything you write down later.
Proving the Cash Actually Changed Hands
Identifying the provider is one requirement. Substantiating the amount is the other. Cash leaves no automatic trail, so you build one yourself. The IRS doesn’t publish a specific checklist for documenting cash child care payments, but the general recordkeeping rule holds: if you claim a credit, you should be able to prove what you spent.
Useful practices:
- Write a receipt at each payment, signed by the provider, showing the date, amount, and hours of care.
- Keep a running log in a notebook or spreadsheet across the year rather than reconstructing at tax time.
- Save any texts or emails discussing amounts or schedules.
- Match ATM withdrawal records to your claimed payments where you can.
None of these individually is required. Together they build a credible record that a return preparer or an examiner can follow.
The Household Employer Problem Cash Payers Often Miss
Claiming the credit is your side of the transaction. If the caregiver comes to your home on a regular schedule, follows your instructions about your child’s routine, and uses your supplies, the IRS almost certainly considers them your household employee rather than an independent contractor.7Internal Revenue Service. Independent Contractor (Self-Employed) or Employee? A weekend teenage babysitter usually isn’t. A regular nanny usually is.
That matters because household employers owe employment taxes once wages cross certain thresholds. If you pay any single household employee $3,000 or more in cash wages during 2026, you owe Social Security and Medicare taxes, a combined 15.3% split evenly between you and the employee. Pay $1,000 or more in cash wages in any calendar quarter across all household employees, and federal unemployment tax kicks in at 6.0% on the first $7,000 of wages, usually reduced to an effective 0.6% after the state credit.8Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide You report all of this on Schedule H, attached to your Form 1040.
Wages paid to your spouse, your child under 21, or your parent are generally exempt from household employment taxes, with limited exceptions.8Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide Everyone else is fair game. Many parents paying cash simply don’t realize this obligation exists. Filing Form 2441 with a nanny’s name and address, combined with no Schedule H showing employment taxes, is the kind of mismatch that can invite questions.
What Happens If Your Claim Is Denied
If the IRS denies the credit, you owe back the credit amount plus interest. A 20% accuracy-related penalty can apply if the error came from negligence.9Office of the Law Revision Counsel. 26 U.S. Code 6662 – Imposition of Accuracy-Related Penalty on Underpayments Deliberately fabricated expenses or providers can trigger the 75% civil fraud penalty and, in serious cases, criminal referral.
One boundary worth naming: the IRS’s authority to ban a taxpayer from claiming a credit for two to ten years applies to the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit. The Child and Dependent Care Credit is not on that list.10Internal Revenue Service. What to Do If We Deny Your Claim for a Credit A denied claim doesn’t lock you out of claiming the credit in future years.
An honest under-the-table arrangement, documented properly, is usually a winnable claim even if the TIN slot on Form 2441 ends up empty. Ask for the information in writing before you start paying, keep receipts for every cash payment, and file Form 2441 with whatever you have plus a statement explaining what you don’t.