Grandmother In home nanny

[annah7256]

I watch my grandchildren in my childs home, i dont file taxes but this year she is claiming the child care credit. how do i file or does she file me as an employee. We have looked everywhere and have gotten no straight answers.

[MinhT1]

Your child care (or babysitting) income is considered by the IRS as self-employed income.

In TurboTax, you report this self-employed income under Other self-employed income. You can deduct related expenses from this income.

To do this, you need to use TurboTax Self-Employed (Online) or TurboTax Home & Business (CD/Download).

• In TurboTax, under business income, just under Type of Income, click on Add Income for this work
• On the next page, click on the radio button next to Other Self-employed Income
• Click Continue to enter your income received in cash, checks or bank transfers.

[TomD8]

Tip: Be sure the income you report on your return matches the amount that your child claims for the Child and Dependent care credit.  Your child has to enter your SSN on his/her return and the IRS will match up the numbers. 

[Hal_Al]

The lack of straight answers is  because there is some wiggle room there and the rules have changed recently.

Grandparents are usually exempt from the "nanny tax", except if the parents are claiming the dependent care credit (DCC).

Bottom line: you must claim, as income, at least, the amount your child uses to claim the dependent care credit.  And you must pay social security and Medicare tax (FICA) on the income.

It's optional whether your child files schedule H and pays the FICA tax or you pay FICA as "self employment" tax (SET).  Since you're going to have to file an income tax return anyway, it's probably simpler for you to claim it as self employment.  If you use online TurboTax (TT), you will have to upgrade to the self employment version.  Any version of the download (desktop)  software can handle it.