I babysat a child and now she wants to turn the money into the IRS so I have to pay taxes on the money..?

Question

I watched a 15 month old baby for 2 months. I quit due to an incident and now she wants to turn in the money she paid me to the IRS. She never mentioned this before I took the job. Besides I thought I was taking a "babysitting job" but she claims its not babysitting but rather childcare. I only made 200 dollars there. She is asking for my SSN and I told her that I wasn't comfortable giving that to her. I feel that she should have gotten all of that information before I took the job. Anyway she is telling me that she is still going to turn the money in to the IRS, to recieve her tax break, with notion that I refused to give her my SSN. She also said that this could cause potential harm to me. Why? what could this do?

Answer 1

This is what you do. First, notify her that you will provide her with appropriate documentation in a timely manner.

Then go to this link:

http://www.irs.gov/businesses/small/article/0,,id=102767,00.html

and get an EIN. This is a tax ID number for a business and will suffice for your purposes.

Make out an invoice to this lady. Identify your
Your Name: (Your name) Babysitting Service
EIN:
Child for whom care was provided:
Dates of care:
Amounts paid for care:

and mail or deliver this written document to her, letting her know that this is what you are reporting on your tax return. You are not required to give it to her before the end of January.

With a detailed invoice, she will be more reluctant to try something funny, like overstating how much she paid you, or try to claim child care at times when she was not working.

Now, in reality, if you are not otherwise required to file a tax return, then you do not have to report this $200. If you are required to file a tax return, you can fill out a Schedule C but you will not have to pay Social Security or Medicare taxes, and the additional income taxes may be little or nothing.

Answer 2

It was taxable income to you whether she turned it in or not, and whether it was called babysitting or child care. The fact that she is going to turn it in just makes it more certain that you'll get caught if you illegally try to evade taxes on it by not reporting it on your tax return.

You are required to give her your social security number for this purpose. If you refuse, you can be penalized.

On $200 you aren't going to owe a lot of tax. You'd probably be ahead to just comply. It doesn't sound like you watched that baby very regularly, to have only earned $100 a month. If you were watching the baby so both parents (or the mom, if she's a single mom) could work, she is entitled to claim it as a child care expense. If you were just watching the baby while she went shopping or something, then she can't claim it, but legally it's still income to you.

Answer 3

I would be concerned about giving my SS number to just anyone too. I'm not really sure why she would need it if you were paid in cash, without proof that she paid you the 200 dollars she cannot claim the childcare credit anyway. I have never heard of anyone doing this to their babysitters, as long as you put the 200 dollars on your income at tax time you will be fine. And on top of that it wouldn't make that much of a difference on your taxes anyway. It seems kind of strange at this time, with all the concerns about identity theft, that you could be fined for not giving your SS# to someone who seems like is not even an "employer". Don't give in to her pressure, just report the income and from my way of seeing it the IRS wont do anything to you. They have way bigger(and more lucrative) things to worry about.

Answer 4

It's time to grow up. The babysitting income was *always* taxable. And babysitting *is* childcare. (If your only income for the year was this $200, you don't have a filing requirement. If you had other income, it could increase your taxes a little.)

Yes, she can turn in your name and address and indicate that you refused to give her your SSN. The IRS makes it a requirement that you give it to her--and there is a $50 fine if you refuse.

From the instructions for form W-10
Penalty for failure to furnish TIN.—TINs are needed to carry
out the Internal Revenue laws of the United States. Section
6109(a) requires a provider of dependent care services to give to you a valid TIN, even if the provider is not required to file a return. The IRS uses the TIN to identify the provider and verify the accuracy of the provider’s return as well as yours.

Income tax reporting requirements for dependent care
providers.—The individual provider must report on his or her
income tax return all income received for providing care for any person. If the provider is a self-employed individual, the income is reported on Schedule C or C-EZ (Form 1040), whichever applies.

If your care provider does not comply with your request for
one of these items, you must still report certain information on
your Form 2441 or Schedule 2, whichever applies. For details, see the Form 2441 or Schedule 2 instructions.

A care provider who does not give you his or her correct TIN
is subject to a penalty of $50 for each failure unless the failure is due to reasonable cause and not willful neglect.

Answer 5

You can file form 3949A and submit it to the IRS. I recommend that you fill it out entirely and provide info on how these individuals violated the law. Provide where they bank and other information you have- name of the company, etc. This form is very confidential and you may get a reward depending on how big is the fraud. As for the child support, once you file an enforcement with your state, they can file an offset with any refunds that he may receive from any of the government including the state or the military/ss, etc. Good luck.

Answer 6

She wants to file for the Dependent Child Tax Credit because she needs to complete a form which will identified you. Then you have to include your babysitting money on your taxes. She could contact the local IRS office. I wouldn't babysit for her any more.

Answer 7

As a babysitter, you were a household employee. Wages to household employees is subject to Social Security and Medicare tax if it exceeds $1,500 per employee so she should not be collecting any from you (if she wants to.) To claim a tax credit for child care, the IRS form must include the social security number of the care provider. That's you. There is nothing wrong with this.

Answer 8

Technically, she's right. However, I don't see that she can compel you to provide your SSN after the fact. For only $200, this sounds more like a personal vendetta thing.

Answer 9

I agree with wartz however if she paid in cash she can do nothing