May depend on source of income. Income paid "by the child" is exempt from Federal Income, Social Security, Medicare, and Federal Unemployment taxes. In California, the county Department of Health and Human Services may pay you for caretaker services for your disabled child or adult child, but your child is considered your legal employer and you receive a W-2 showing your child as the employer but with a DHHS federal employer number. (EIN)
See Form 1040 Schedule H and its instructions for tax treatment of your caretaker income. With a rare exception, most caretaker income from child to parent, spouse, or their child under 21 is exempt from Income, Social Security, Medicare, and Federal Unemployment taxes. State tax treatment would be up to your child's state of residence.
I have not discovered yet how to treat the 2020 W-2 form that I received showing the caretaker income from my child. There is no information on the form showing that it is tax-exempt nor information showing that the payee is the parent of the payor. Anyone know?
