Schedule H and mom as a nanny

[pauldwu]

I want to file schedule H with my mother in law being my nanny.  Can I do that?  The forms says you don’t have to for parents, but I want to because she doesn’t have enough work credits to be eligible for social security.  I understand there will be taxes to be paid on both sides, but I am willing to do that.

[DawnC]

She won't get the social security credit from your Schedule H.    To get the credit, she needs to file a tax return claiming the amount you paid her.   If you paid her through payroll checks, she would have a W-2 from you to file and you would include that income on your Schedule H.   But it doesn't sound like you went that route.   If she was not treated as an employee, she can file a Schedule C to report the income.   She will pay self-employment tax on the income which will be credited to her social security account.    Any amount she claims on a tax return for caring for your dependent counts as credit for the purposes of the dependent care credit for you.   

[Huan2021]

If she files schedule C, will she need to sign up for an EIN, get licenses, etc.  Doesn't she need to get a 1099 form?  Or can she just report income and pay the social security and medicare taxes?  

[Vanessa A]

No, you do not need an EIN for a Schedule C.  A Schedule C is for a self-employed individual which means they can use their SSN.  

You can report your income on the Schedule C with or without a 1099 as a self-employed individual should keep track of their expenses and income.  They will also be responsible for paying Self-Employment (Social Security and Medicare) taxes when they file their return. 

[Huan2021]

I'm doing their taxes on turbo tax for them.  I had to upgrade to deluxe to get the self employment section added.

How do they pay their social security and medicare taxes?  I am done entering all the info ($$$k for baby sitting) and ready to file, but nowhere does it says that I have to pay soc sec or medicare taxes for the self-employment.

[DaveF1006]

There should be Self-Employment taxes assessed on the income reported in the self-employment section of Turbo Tax. Check your forms to see if you have a Schedule SE as a form in your return.

1. If using Turbo Tax online, go to tax tools>tools>view tax summary>preview my 1040
2. Check Schedule 2 line 4 to see if there is a self-employment tax listed. If so, then your FICA taxes are reported because these are the same as self-employment taxes.
3. If there is an amount listed, then there is a Schedule SE included in the forms in your return.

@Huan2021

[Huan2021]

Thanks.  I see the preview.

I don't see a schedule SE, but it does mention it.

Under Schedule 2 ' Additional Taxes

Line 4 Self-employment tax. Attach Schedule SE (there is an amount there, but I don't see the actual schedule SE.)

This is what they have on the preview 1040:

Form 1040 or Form 1040SR Worksheet Navigation QuickZooms

QuickZoom to Schedule 1 ' Additional Income and Adjustments to Income

QuickZoom to Schedule 2 ' Additional Taxes

QuickZoom to Schedule 3 ' Additional Credits and Payments

[Huan2021]

nevermind.  I filed and see the schedule se.  How do I pay it?  I submitted it and there are no instructions on paying the SE taxes.

[PattiF]

The SE taxes are added to the tax liability. The amount owed includes the self-employment taxes. The amount of the SE taxes is from line 23 of Form 1040 which was transferred from Schedule 2, Line 21.

@Huan2021

[Huan2021]

So if I am getting a refund, and schedule SE has a tax amount, it means I don't need to pay any taxes because the amount I owed is less that what I am due for a refund?  Example, I'm getting a tax refund of $500.  My schedule SE shows I owed $400 taxes due.  That means the $400 was already deducted from my refund?

[PattiF]

Yes, you are correct that the Schedule SE taxes are paid with your return and you are receiving a refund. They were deducted from the amount of your refund leaving you with a refund of $500.