grandmother babysits in daughter's home

Laura1159 — Mon, 17 Feb 2025 03:40:13 GMT

Grandma goes to her daughter's home to babysit - she does not live there. Daughter pays her $300 per week.

From what I read in various places, grandma reports this money under other income and daughter can claim

the daycare credit? Does mom have to pay both shares of fica cuz she is considered self-employed?

That is the part that is very confusing. Grandma also gets earned income credit for her disabled son

that lives with her. Does this income she gets from her daughter for watching the grandchild count

as income for Grandma's tax return so she will still quality for earned income credit for her disabled son?

Grandma also previously qualified for free health care because she was low income. Will she just

have her daughter write a letter about how much she pays her every week in order to determine

whether she is allowed to still keep her free health care? I have tried to ask the IRS these questions,

and they just read the sentences in the publications that I read myself.

Thank you for any help if anyone knows these answers.

Re: grandmother babysits in daughter's home

LeticiaF1 — Wed, 19 Feb 2025 15:17:37 GMT

In this case, Grandma is considered to be a Household employee. She will have to pay income tax on wages, but she not required to pay Social Security or Medicare tax, if she earned less than $2,700. If she made less than $2,700 no W2 Form is required, and she would just report her wages on Form 1040, line 1b.

Whether she qualifies to get Earned Income Credit and free health care, it'll depend on how much money she makes. To qualify for free healthcare, they might ask for letters to prove her income or might just want to see her tax return.

Her daughter will have Schedule H Filing Requirements, she might have to file a Schedule H if:
• The taxpayer paid a household employee cash wages of $2,700 or more in 2024.
• The taxpayer paid cash wages of $1,000 or more in any calendar quarter of 2023 or 2024 to all household employees. If this test is met, the first $7,000 paid to each employee in 2024 is subject to FUTA tax.
• The taxpayer withheld federal income tax.

If she paid less than $2,700 she would not be required to pay Social Security or Medicare tax. Her daughter should be able to claim the Child and Dependent Care Credit on her return.

Publication 926 (2025), Household Employer's Tax Guide

Topic no. 756, Employment taxes for household employees

[Edited 2/19/25 | 7:17 AM PST]

topic grandmother babysits in daughter's home in Deductions & credits

grandmother babysits in daughter's home

Re: grandmother babysits in daughter's home

Publication 926 (2025), Household Employer's Tax Guide

Topic no. 756, Employment taxes for household employees