@Jimcz When you pay a child care provider, you should have a clear understanding with them about how you are going to pay them, and about how you are going to report their income to the IRS. It sounds like you want to treat the babysitter as an independent contractor, and technically you can since you paid them less than the $2300 that would have required you to issue a W-2 and withhold Social Security and Medicare.
If you had this babysitter providing childcare so you could work, then can we assume you are entering the amount paid for the child care credit on your own tax return? In order to do that you need the babysitter's Social Security number or Tax ID. The income the sitter reports on her own return has to match what you report to the IRS. Was she forewarned that you would report the earnings to the IRS so that she could save some of the money earned toward paying the self-employment tax she will now owe for Social Security and Medicare (about 15%)? Or will this be surprise for the babysitter? If you did not reimburse the sitter for using her own gas, paying tolls, etc. for driving the children around, then, yes, she can prepare a schedule C for her expenses, which will offset *some* of the self-employment tax she will owe.
The sitter would be well advised to get a tax ID from the IRS so that she does not have to give out her SSN.
https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
