No, the sites are not wrong. If you meet the requirements, then yes, they should be treating you as an employee. See Tax Tips for Nannies and At Home Care Givers.
But, the reality is that this family did not withhold any taxes in 2020, so they are treating you as self-employed for that timeframe.
Therefore, at least for 2020, you must report the income as self-employed income.
For 2021, there are two options:
Option Schedule H filed by the family: Your taxes are withheld for you, there are no deductions.
- The family must file Schedule H,
- potentially handle payroll themselves or retain a payroll service to withhold federal and state taxes out of each paycheck,
- they must pay their half of social security and Medicare taxes, 7.65%
- file your payroll taxes quarterly and annually,
- as well as issue Form W-2 at year end,
- and pay Federal and State Unemployment Taxes.
- You will receive income after taxes
- You would not be able to deduct any expenses.
Option Self-Employed:
- Alternatively, you are in control of saving and paying your own taxes.
- Taxes should be paid four times a year both at the federal and state level.
- You would need to set aside 15.3% for social security and Medicare to be paid 4 times a year in addition to any federal and stay income taxes.
- Deduct related expenses such as if you bought the children anything, and other ordinary and necessary expenses.
If you choose to be self-employed, check out QuickBooks Self-Employed. This can keep track of everything on an app. You can hook up your bank to it and categorize any expenses. It will also help you keep track of your mileage of 56 cents/mile and help calculate your estimated taxes due so you pay them on time 4/15, 6/15, 9/15 and 1/15. Click here for steps How do I access QuickBooks Self-Employed?
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