@stech wrote:
I usually baby at my house and sometimes at their home. Since it’s family, I am ok with picking easy option for taxes. They did pay me by check. No taxes withhold. Can I be just 1099?
Also this is for 2022 taxes.
Let me summarize some main points including two or three that (I think) were missed.
1. If you are self-employed, you file a schedule C as part of your tax return. You won't get a 1099, because only businesses issue 1099s to their contractors. You are required to report your income and expenses from your own accurate records even if you don't get tax paperwork. You will pay income tax and self-employment tax on your net profits.
2. You report your gross income and you can subtract certain ordinary and necessary expenses of the business. That can including buying toys, protective equipment for corners, cabinets, etc., and money you spend on diapers or snacks. If you provide care in your home (using your home for business) you can include certain household expenses as deductible business expenses, including a percentage of your rent or mortgage, utilities, and insurance. Make sure to keep accurate records. The more expenses you can prove, the more you can reduce your net taxable income. See here for more information.
https://www.irs.gov/forms-pubs/about-publication-587
3. Since you are past your full retirement age, working will not reduce your social security benefit. And in fact, paying self-employment tax (the equivalent of social security tax) may increase your future retirement benefit, depending on your earnings history.
4. If social security is your only income, it is tax-free. However, if you start making other income, you may be required to pay income tax on a portion of your social security as well. For starters, if you are single, and half your social security plus all your other income is more than $25,000, then you will start to pay income tax on a portion of your social security as well as paying tax on the other income. The overall formula is complicated, and depends on your total income (social security, babysitting, any pension, IRA, etc) so I can't really go into specific detail. There are some calculators on the web that can help you estimate the total tax you will owe.
5. You can't lose Medicare coverage, but if your income is very high, the government will increase your premium. This is called Income-Related Monthly Adjustment Amount or IRMAA. This starts at an income of $97,000 for 2023 if you are single, higher if married. The limits and adjustments are here, although it sounds like you probably won't be close to the IRMAA limits.
https://thefinancebuff.com/medicare-irmaa-income-brackets.html
6. You will need to make estimated tax payments 4 times a year, to account for the self-employment tax, income tax on your net earnings, and income tax on your social security (unless you have tax withheld from social security. The time table is this:
| Income earned |
Estimated payment due |
| January 1-March 31 |
April 15 |
| April 1-May 31 |
June 15 |
| June 1-August 31 |
Sept 15 |
| Sept 1-December 31 |
Jan 15 |
If you don't make estimated payments, you can be assessed a penalty, even if you pay in full at tax time. Depending on your expected total income, estimated payments of 20%-30% will probably cover you. For more accurate estimates there are various tax calculators online. The IRS has one here,
https://www.irs.gov/individuals/tax-withholding-estimator
And Turbotax has one here.
https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
https://turbotax.intuit.com/tax-tools/calculators/self-employed/
