Child care (or babysitting) income is considered by the IRS as self-employed income.
Your daughter is required to file a tax return when self-employed income exceeds $400. The limit of $13,850 is for wages on a form W-2.
Self-employed income is subject to income tax and self-employment tax which is calculated at 15.3% on 92.35% of the net self-employed income.
Your daughter pays only self-employment tax as her income is below the standard deduction.
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