A friend of mine takes care of a child for the last 5 yrs and has not reported it to the IRS. There is a court case against this family and she is afraid this may come up and someone may report this to the IRS. Would she be in trouble for not reporting it?
2006-06-14 04:08:43 · 7 answers · asked by Anonymous in Politics & Government ➔ Government
If she is reported how long does it take for the IRS to investigate.
2006-06-14 04:14:56 · update #1
The IRS doesn't care whether a caregiver is licensed or not. If she performs services for pay, that pay is reportable. Yes, she can be in trouble for not declaring this income on her tax return; if she signed a return without including this income, she has committed fraud and has evaded taxes. The IRS can go back forever if total income is understated by more than 25%, and/or if no tax return was ever filed.
She should see a person who knows about child care taxes, because there are a lot of deductions to be taken, especially if she provides this service in her home. If she made over $ 400 as a self employed person she is subject to self employment tax in addition to income tax.
As you can see there are many variables to be considered. There are also minimum amounts below which no return is required. She can amend old tax returns, and if she had a loss because of a variety of deductions available (transportation, food, utilities, etc.) may even get a refund, as far back as three tax years.
( Al Capone was convicted for income tax violations - not his other criminal activities.)
2006-06-14 04:26:10 · answer #1 · answered by Mike 3 · 0⤊ 1⤋
Yes...in a simple answer. The IRS expects you to report ALL income - even babysitting (under the table work). If it weren't for the lawsuit, it probably wouldn't be an issue, no one would ever know, but technically it's against the law.
2006-06-14 04:11:27 · answer #2 · answered by RCF1977 4 · 0⤊ 0⤋
There are a few issues at hand. If your's is the only child she watches, and she has other income, it may not be an issue. IS the money to pay for her services, or is it to provide for any needs the child has while in her care? She could get in trubble, but whay would this be reported? Is the law-suit relevent to child care? The other issue is how many children while unlicenced.
2006-06-14 04:15:20 · answer #3 · answered by theaterhanz 5 · 0⤊ 0⤋
You can get in trouble for ANY income not reported to the IRS, regardless of whether or not you're licensed.
2006-06-14 04:10:51 · answer #4 · answered by Julie B 3 · 0⤊ 0⤋
It depends on how much income she actually earned and what her income was on her taxes/ generally if it was over a spceific amount (it changes from time to time but i think in general its about a thousand dollars) then yes she has to report it.
2006-06-14 04:12:52 · answer #5 · answered by cece 4 · 0⤊ 0⤋
yes but you can say she dint know how and that was a part time job intill she graduated 4 collage( if she doesnt go to collage well than good luck)
2006-06-14 04:15:29 · answer #6 · answered by hunter 3 · 0⤊ 0⤋
Yes it is income it doesnt matter weather she was licensed or not.
2006-06-14 04:11:03 · answer #7 · answered by bildymooner 6 · 0⤊ 0⤋