Babysitting Income and filing taxes on it...?

Question

I babysit my neice and they pay me 50.00 a week...they have paid me a total of 1800.00 this year. My question is...she is filing it on her taxes as childcare expense so do I need to file this as well? This is my only income...my hubby works full time and we always file jointly. I didn't know if this was even enough money to worrry about filing on. Thanks for your help!

Answer 1

Wow, what a conglomeration of shaky information you've gotten so far, along with a couple of correct answers.

Even if you weren't filing jointly, you'd have to file on this amount, since you will owe 15.3% of it in self-employment taxes This is for social security and medicare.

If your total combined income with your husband exceeds the minimum for being taxable, then you'll also be paying income tax on this amount.

To file childcare expenses on her tax return, she'll need to list your social security number. The IRS will cross-reference this with your return to see than you claimed it.

Filing as separately rather than jointly wouldn't change the self-employment tax amount, might save you personally a little on income tax since there wouldn't be any, but your husband's additional tax for filing separately would be more than the savings on your side, so as a couple you'd be worse off.

Answer 2

First for babysitting for only 50$ a week I think they should of done you a favor and not reported it. As far as the taxes go legally you are sopose to claim them as you file jointly with your spouse and together I assume you make enought to be taxed. The possiable good side of this is that you can make deductions for all the food, electricity, heat and etc that was used in babysitting which would probaly equal up fast. The other option is to change your status to filing seperatly and then you wouldnt meet the tax threshold so you wouldnt need to file this.

Most likly though if you dont report it and you file jointly nothing will happen. If it is caught I am sure they will just have you pay what you would of owed assuming no other past troubles. I think you may want your sister/brother to find another person because after you factor in the cost of everything, the fact that your family so your going to probaly take better care of the child then a stranger they will probaly end up having to pay more and get less care somewhere else. Either way if you need any more help I would suggest talking to a finacial advisor or a H&R representative

Answer 3

When they claim the deduction the tax form asks for the name of the person they paid. The IRS will know you have been paid the money.

Claim the income on your taxes, but also claim legitimate business expenses against this income. A good example would be food you provided, toys you purchased just for your daycare business, a portion of your utility bills, etc.

Always consult a tax professional, but you should be able to write off a healthy portion of the income and not have such a high tax bill.

PS: The amount you charge for daycare should go up to cover your taxes, don't you think??

Answer 4

You are certainly NOT exempt. Earning more than $400 in self employment requires you to file a tax return. You file with a schedule C for self employment and pay self employment tax. The good news is that if you meet the requirements, you might qualify for EIC, a refundable credit. Keep records of your income and expenses of your self-employment. Your permitted deductions LOWER your taxable income, thus lowering the amount you have to pay in. READ up on this: www.irs.gov self employment, schedule C, nanny tax

Answer 5

Unfortunately, since she is filing it on her return, to be safe you really should file your tax return and claim the money. Since you didn't have any taxes withheld or will be receiving a W-2, you'll have to file a Schedule C, as if you were self employed. The Self employment taxes have to be paid regardless of how low your income is. The $3000 rule only applies if you have W-2 income.

Answer 6

Yes you do. Your sister/sister-in-law also needs to file and pay employment taxes (I am not kidding), the IRS can mess with you in so many ways.

If I remember correctly she will need to report your social security number, so it is a quick cross reference to make sure it looks like you are claiming the money.

Taxes suck.

Answer 7

If you file jointly, you have to declare all earned income. You might be better off to file separately but I doubt it. You would not pay taxes on your babysitting income, but your husband would not get tax credit for you either.

Answer 8

You are married filing jointly either misc income or do a Schedule C. Also, you will have to do a schedule SE for FICA and Medicare taxes.

Answer 9

Yes, that's taxable income to your and your hubby.

If you worked in their home, they must withhold SS Tax (employer's share) on the wages paid to you and pay them to the IRS. You'll pay the employee's share with your tax return.

If you worked in your home, you must pay the full SS Tax on those wages, both the emoloyer's share and employee's share.

Answer 10

If they asked for your SS number then they plan to take a child care credit showing the IRS what they paid you so you better report it on Schedule C of your joint 1040.