@pasknyc wrote:
I am not taking childcare credit but i plan on paying my mother using my dependent care FSA - but i wanted to know if it's better for her tax-wise to be my household employee (and watch the kids at my house) and take the nanny tax exception or to be in her house and report the income as "hobby" income (since she is not in it for making a business) which multiple other tax sites are suggesting is fine. Although the person above seems to suggest that is not the case.
If a household employee and a grandparent then the social security and medicare tax does not apply. She still must report the income as household employee income that will count at ordinary income (same as W-2 income) on her tax return, but no additional tax.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
