Where on tax form should I enter income from childcare?

Question

I babysit my niece while her mom works, and her mom pays me a little- what she can afford. According to IRS, in order for her to claim what she paid me as a deduction, I have to claim it as income. Where on my tax form should I enter that amount?

Answer 1

She gets the credit whether or not you claim the income. Of course when she claims the credit, the IRS now knows about your income and will be looking for it.

File Schedule C or C-EZ with your tax return to account for the income and any business expenses. You can deduct many out-of-pocket costs such as diapers and meals you provide. Then file Schedule SE to calculate the self-employment tax (15.3% of net profit) if the net profit on Schedule C is $400 or more.

Answer 2

Its too late for you to report it. And her Mom cannot report it as a deduction. Why?

A babysitting deduction can only be claimed when your Mom who pays you, files Schedule H - Household Employment Taxes during the year. Your Mom
should have issued you a W-2 and whatever was paid to you is also subject to unemployment taxes: Federal and State.

There is no place on the return for a babysitting deduction. If your Mom claims babysitting as a deduction on lets say a Schedule C, she will be audited and the deduction thrown out.

Next time, report the babysitting on Schedule H.

Answer 3

You'll file a schedule C or C-EZ to show the income and any associated expenses (e.g. food, diapers if you provided them), and a schedule SE to calculate self-employment tax. The totals from the bottom of each of these schedules will transfer to a form 1040.

Answer 4

Your aunt will only benefit from the credit for child care if she owes taxes. If she does not benefit, there is no reason to put your information on her return.

Your income from child care will be figured on Schedule C. Subtract all your expenses and the net income will be taxable.

This babysitting money is earned income for you, and can qualify you for Earned Income Credit if you have a dependent child.