I've got my own business too, having been self-employed as a computer consultant for 12 plus years now. So in addition to a SCH E for my three rental properties, I also file SCH C for my self employment. I've "dabbled" in babysitting back when my own daughter was in high school and babysat for the neighbors. I do recall quite a bit from helping her with her tax returns. I may not recall all the details. But I do know what matters.
- Was the babysitting done in your home? Or the home of the person you provided the daycare for? That matters on the SCH C. If you did the caregiving in your home, then if certain other criteria are met, you may (or may not) be able to claim expenses related to that. (The program will know, based on your input and will ask the appropriate questions.)
For the babysitting income, I'm sure you're aware of the below. But I'm stating it anyway so it's "in writing". Besides, others reading this thread may find the information useful. For starters, I assume the EIN you obtained was *NOT* for the partnership, or any other business use beyond babysitting, or for your personal use. If so, then I highly suggest you use the EIN instead of your SSN on the SCH C. There's a reason for this.
- The IRS issued you that EIN, and when you applied for it you had to "tie it" to a social security number which I assume is your social security number. So when you use the EIN the IRS "knows" what social security account to tie the self-employment taxes to. For others reading this, the 15.3% self employment tax is in addition to the regular tax, and is basically the employer side of your social security and Medicare payments. These payments are credited directly to the social security account associated with the EIN.
- You are required by law to provide those who pay you for your babysitting services, the amount they paid you for the tax year, along with your SSN or EIN so they can claim the child care credit on their federal tax return if they qualify. Now I don't know about you, but there's no way on this green earth that I will 'EVER" under any circumstances provide my SSN to a client. Just not gonna happen. But I will provide them with my EIN. This is because if my SSN is ever compromised, it can totally ruin my life. However, if my EIN is compromised, the unscrupulous person using it illegally can only impact my business. So you should treat your EIN the same as you treat your SSN, and only provide it to those who have a demonstrated "valid" and "legal" need for it.
For your babysitting, you fulfill your legal requirement for this by providing all those who pay you a W-10 before Jan 31 each tax year. Get the form at <a rel="nofollow" target="_blank" href="
https://www.irs.gov/pub/irs-pdf/fw10.pdf">https://www.irs.gov/pub/irs-pdf/fw10.pdf</a> To make things simpler for the issuer of the W-10 you can (and should) include the amount paid during the year on the back of the form. This form is not sent to the IRS or any other taxing authority. Its for the care provider's clients only. So in addition to the required information on the form, you can include any additional information as desired, that will make things easier and simpler for both provider and client. It would also be a good idea to keep copies of the W-10 in your own records, along with a signed acknowledgment of receipt by each of your clients, should they ever try to accuse you of not providing the information. (The penalties can be high, and if accused, the burden of proof is on *you*.)
Finally, on the babysitting/SCH C stuff, if your SCH C business earns less than $400 for the tax year, you'll still file SCH C and pay regular tax on the income. But if it's less than $400 for the tax year no self employment tax will be assessed or paid.
Give me a minute while I go do some digging for partnership information. I have some really good stuff that I'm sure you'll appreciate.
