Paid Adult Child $9000 for childcare

[malandseadel]

My 25 yo child helped us as a caregiver throughout 2024.  She helped care for her sibling with special needs. Sometimes this was done here, sometimes at her place, sometimes it was driving to dr appts... We paid her varying amounts and in different methods - cash, cashapp, or even a bit of a barter system where we would pay her bills in exchange for her work. We paid her $9000 over the course of the year.  In case it's relevant, she also did childcare and odds and ends for other families, but collectively, those were much less than we paid her. She's planning to do a Schedule C for those.

We don't know how to proceed for this $9000. Depending on what we read - she could be a household employee or just need a 1099-NEC. The definitions don't really fit.  She would use her car to transport, she would care for him at her house sometimes, she used his wheelchair and medical equipment. Either way, we did not withhold anything or file anything (yet) to document it.  I'm struggling now with which way and how? 

If I have to file a 1099-NEC, it seems fairly straightforward, as I can efile a 1099-NEC on TurboTax's Quick Employer forms. But how do I document on my own taxes that I paid expenses on a 1099-NEC?  I have TurboTax Home and Business.  If I have to file a w-2 for household employee, we've not withheld or paid any related taxes on that. How do I even do that and calculate/pay those fees?  And again, where do I document that in TurboTax?

[AmyC]

1. 1099-NEC vs w2   You are struggling with contractor or employee. The IRS uses several factors to determine if employee or contractor. An employee is told when to work, how to work, and provided supplies. A contractor has the option to turn down a job and does it when they are available.

See Worker Classification 101: employee or independent contractor to help you determine if your daughter is an employee (w2) or a contractor (1099-NEC).

2. If you file form 2441 for child care expenses, those expenses would be included. 

3. You can file the forms through QuickBooks using your TurboTax account. If you are filing a w2, you can calculate those fees. If she is a contractor, as I suspect, then you issue the 1099-NEC and have no tax consequences.

4. If you file with her as a household employee, all the taxes will be included on your Sch H on your personal taxes. Since you did not withhold any taxes, if you decide she is an employee, you will need to pay 15.3% for Medicare and Social Security tax.