Babysitting, taxes, independent contractor?

Question

Hi everyone,

Ok, I've been watching my niece typically 5 days a week all year. I drive to my brother's house to do this. He pays me for this and I plan on claiming the earnings on my tax return, especially since he's claiming what he pays me for the child care credit on his return.

I've kept very careful track of my earnings, mileage, tolls, and maintenance on my car all year.

I was wondering if there's any type of calculator or formula I could use to determine approximately how much in taxes I'm going to have to pay. I know I'll have to file a schedule C in January. But here's what I'd really like to know - if the year ended today, how much would I owe? It's more curiosity than anything.

Thanks!

We're going the independent contractor route to make things easier on both hime and me. We didn't want to deal with the paperwork involved with him making me an employee.

I've made $2750 so far this year, and project that I'll make approx. $3500 this year (I'll be cutting down to 2 days a week next month).

Married, filing joinly.

Answer 1

If you are an independent contractor then he should be issuing you a 1099. On your return you will file a schedule C for self employment. You will be able to take deductions for your mileage, maintenance, tolls, etc there. You will be able to claim ALL mileage during work as well as commute to and from work.

In the end you will owe the government about 30% of your taxable income. (what's left after deducitons)


How much your brother makes determines how much the Child Care Credit actually returns. The more he makes the less he gets back. It is quite possible he will get back far less than you will be paying in taxes creating a net loss for the family. I can't legally tell you to keep it all in unreported cash...

Answer 2

Well, first of all, you don't just get to decide whether you are an independent contractor or not - there are rules that determine that, and from what you say, you'd be an employee, not a contractor. But as long as you are reporting all of your income and paying your taxes on it, the IRS probably won't care.

Your car expenses for commuting from your house to his and back are commuting expenses so are NOT deductible. If as part of your duties you are driving your niece to appointments or dance classes or play dates or something, those miles would be deductible.

Since you don't give numbers on what you make, it's not possible to estimate what you owe. Also, the amount you owe would depend on various things about your personal situation, for example if you are single or married among other things.

You should be making quarterly estimated payments on form 1040ES, to avoid a whopping tax bill when you file, and also penalties for underwithholding even if you pay all that you owe when you file.

You do know, I assume, that you'll owe self-employment tax (social security and medicare) of approximately 15.3% of your net income, in addition to any federal, state and local income taxes that you owe.

Answer 3

this is a hard question to answer with out any money figures -- but lets say he pays you $6.00 a hour -- u have worked about 1040 hours or made 6250 so far. when you take out your deductions this will drop lets say to 5000 -- which will put you in the lowest brackets 10% so it works our to about $500 -- the rub comes in if you keep doing this all year you will jump to $782.50 plus !5% for all wages ove 7825. this could force you to owe ove 1000 at the end of the year.. and depending on how the irs looks at it they could come at you for not filing estimate taxes which could lead to a fine. i hope i have helped and not totaly confused you. good luck

Answer 4

You need to contact Irs or a tax accountant if you use H&R block to file may be they can help.. my daughtr runs a day care, she claims food car household expence etc she charges $ 700.00 each kid and has licence for 7 kids with a waiting list this is in Canada

Answer 5

Actually he's supposed to give you a W-2. You would be considered a domestic employee.
You can go to paycheckcity.com and do some calcs.