in Education
708226
You'll need to sign in or create an account to connect with an expert.
I'm in a similar situation, where my mom comes to babysit at our home. She's also retired, SS income and not my dependent.
I'm in CA, which seems to have similar rules as the IRS for using family members as household employees, but do I have to report the wages to the CA EDD as a household employer (even though I don't have to pay any payroll taxes, nor do I have to withhold income tax)?
Two questions:
1. Are there any situations when a child care provider is considered an independent contractor when child care services are provided in the home of the child? I.e., are there times when a 1099-MISC can be issued?
2. If a W2 is issued, can the child care provider still claim business expenses such as mileage, tolls, etc.? If so, where are they claimed? What if the care provider takes the standard deduction?
@Jimcz If the child care provider works in the home of the child, then the babysitter may be a household employee. Did you pay your childcare provider at least $2300 to babysit in your own home? If so they are supposed to get a W-2---not a 1099NEC.
W-2 employees cannot deduct job-related expenses on a federal tax return.
Job-related expenses were eliminated as a federal deduction for W-2 employees by the tax laws that changed for 2018 and beyond. Your state tax laws might be different in AL, AR, CA, HI, MN, NY or PA.
The child care provider did work in the home of the child. Are there times when they are considered an independent contractor?
The amount paid was less than $2300 so a W2 is not required. That said, could the care provider treat the income as business income and deduct expenses?
Thank you
@Jimcz When you pay a child care provider, you should have a clear understanding with them about how you are going to pay them, and about how you are going to report their income to the IRS. It sounds like you want to treat the babysitter as an independent contractor, and technically you can since you paid them less than the $2300 that would have required you to issue a W-2 and withhold Social Security and Medicare.
If you had this babysitter providing childcare so you could work, then can we assume you are entering the amount paid for the child care credit on your own tax return? In order to do that you need the babysitter's Social Security number or Tax ID. The income the sitter reports on her own return has to match what you report to the IRS. Was she forewarned that you would report the earnings to the IRS so that she could save some of the money earned toward paying the self-employment tax she will now owe for Social Security and Medicare (about 15%)? Or will this be surprise for the babysitter? If you did not reimburse the sitter for using her own gas, paying tolls, etc. for driving the children around, then, yes, she can prepare a schedule C for her expenses, which will offset *some* of the self-employment tax she will owe.
The sitter would be well advised to get a tax ID from the IRS so that she does not have to give out her SSN.
https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin
“Are there times when they are considered an independent contractor?”
In my opinion, this would be rare. The factors that differentiate an independent contractor from a employee include the degree of control that the employer has over the working conditions and performance of the employee. If you control the hours that the person works in the manner in which the person is supposed to perform their task, they are your employee. If you give the person a task but you are not specific as to the exact manner in which the task must be fulfilled, they may be an independent contractor.
For example, I was a church treasurer for a while, and we hired a member of the church to clean. If we had required that person to clean the church every Monday, Wednesday, and Friday between 4 and 6 PM for example, they would be an employee. If we gave the person a task, such as “make sure the church is clean before Sunday service and before the Wednesday meeting“ but left it up to the person’s discretion as to exactly how and when to clean, they are more likely an independent contractor.
If you require that the care provider be in your home on certain days so that you can go to work, I don’t see how they can be an independent contractor, but it depends on the factors and tests listed on the IRS website for independent contractors.
“The amount paid was less than $2300 so a W2 is not required. That said, could the care provider treat the income as business income and deduct expenses?”
The care provider is required to report and pay income tax on all their income regardless of whether they get a W-2 or 1099. If the care provider is an employee is a household employee and does not receive a W-2, they include the income on line 1 of their tax return and write “HSH“ in the space next to the line, to indicate to the IRS that part of the wages was household employee wages. If the care provider wanted to report the income as self-employment, they would file A schedule C, and they report the gross income and can deduct ordinary and necessary business expenses. Then, they pay income tax and 15% self-employment tax on the net profit. So depending on what expenses there really are, the self-employment taxes can outweigh any savings by declaring deductible expenses.
I also can’t imagine the care provider would have very many deductible expenses. The care provider can’t deduct mileage, because driving to and from the care home is their commute and commuting is never deductible, even for independent contractors. They can deduct other items they paid for in the course of providing care, such as snacks or toys, but I feel it would be unusual for a in-home daycare provider to be paying for those things and not the family that employed them. It’s hard for me to come up with legitimate deductible expenses that would reduce the net income from the business to make it worthwhile to report as self-employment rather than as wages.
In my case I was the care provider in my daughter's home which is 250 miles from my home. I made several trips there and with mileage and tolls it would be better if I was not considered an employee. Is that possible?
@Jimcz The trip to and from your daughter's home to babysit is a "commute" to work which is not deductible in any way whether you are an employee or independent contractor. Sorry--you cannot deduct mileage or tolls for traveling to babysit your grandchild.
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
anonymouse1
Level 5
in Education
lillyonly2
New Member
rgrahovec55
New Member
Stitha2
New Member
user17538710126
New Member