You still need to report this as self-employment income even though you are not technically a business. This is because you earned more than $400 for the year. This is an IRS regulation even if there may not be any paper trails to pursue.
It is true however, your daughter can exclude up to $5000 of the employer benefits and not have this income taxed as taxable income on her part.
With this said, you make the decision on whether or not to report this since your daughter is not going to report her childcare expenses. Let your conscience be your guide as i can only advise you to report it as self-employment income.
If you report:
1) Select the federal tab in the left navigational screen in your return
2) Select wages and income at the top of the screen and then select add more income
3) Select Self-employment and then select show more
4) Select Self-employment income and expenses and then select start
5) Just follow the interview and answer the questions as they are asked. You will need to complete the profile section of your business. Even though this isn't technically a business, it is considered a business for tax reporting purposes. You can enter babysitting as a description for the business
6) After this is complete it will ask for income information. Enter this as other common income.
7) After this is complete, the program will try to find deductions unique to your work. After the program finishes doing this, you can now enter expenses for your business. Make sure you list all of your expenses as MichaelG81 suggests. Turbo Tax may also suggest expenses you can claim that will lessen your income and self-employment tax burden.
@Anonymous
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