My wife will be starting to babysit for a family in January but it doesn't sound like the family will be going through the process of withholding taxes throughout the year for us. How should we proceed so that we don't owe a huge chunk of money at the end of the year? From what I've found, I'm thinking I should use a W-4 to estimate our tax liability and then set that amount aside throughout the year so that we can pay it come April 2018. Or should we figure out how to pay the liability every quarter? If so, how is this done?
I also read that it's best to claim the income as "Other income" on line 7 of a 1040 with the letter HSH to designate household employment income rather than claiming it as an independent contractor.
I'd appreciate any help on this.
