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drawdef
New Member

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

 
10 Replies
Hal_Al
Level 15

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

Report the amount they are claiming, for the child care deduction,  as self employment income*. 

You will need to up grade to TurboTax Self  Employment**

*This assumes you baby sat in your home, not theirs.

**There is a work around in TT Deluxe. Enter the income at the 1099-Misc screen, even though you didn't get a 1099. When asked why you got the 1099-Misc, select “Freelancer". TurboTax will prepare schedule C-EZ, instead of schedule C

 

drawdef
New Member

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

What would the difference be if I sat in their home, or a combination of both locations?
Hal_Al
Level 15

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

You could be classified as a "household employee", not subject self employment (social security & medicare) tax (SET)*.
A mixture of both places would make you still self employed.

*A grandparent is exempt from SET. For anybody else, the amount paid would have to be less than $1900.
drawdef
New Member

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

I made more than $1900 and it was all done at my sons home.  Does any of this bear if they can take the credit?  I'm still confused as to where I report this income, lol.
Hal_Al
Level 15

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

Sorry for the confusion. It can be complicated. They are definitely allowed to take the day care credit, regardless of which way you report the income.  The only confusion is over how you report the income.
Because you are the taxpayer's parent, they are not subject to the "Nanny tax". Since you baby sat in their home, you may be able to avoid paying social security tax.
In TurboTax, enter at:
 Federal Taxes
Click on Wages and Income
Scroll down to Less Common Income
On Miscellaneous Income, 1099-A, 1099-C click the start button
On the next screen click the start button on Other Income not already reported on Form W-2 or Form 1099
Answer Yes on the next screen and enter the amount under Household Employee Wages. Enter the full amount they are claiming even though the screen says enter only if less than $1900 (being the taxpayer's parent waives the $1900 limit).

TurboTax will put the income on line 7 (line 1 tax years 2018 and later) of form 1040 with the notation "HSH". This income is earned income and would qualify for the Earned Income Credit (if you're under 65) and for making an IRA contribution.

You MIGHT not be required to report this as income at all, because it is only a transfer of money between family members, and could be considered a gift, under the right circumstances.  But, in order for them to claim the day care credit, you must report it as income.
There is an exception to a grandparent being exempt form the nanny tax:  you (the child's parent) "should count wages to your parent if both of the following apply: (a) your child lives with you and is either under age 18 or has a physical or mental condition that requires the personal care of an adult for at least four continuous weeks in a calendar quarter, and (b) you are divorced and have not remarried, or you are a widow or widower, or you are married to and living with a person whose physical or mental condition prevents him or her from caring for your child for at least 4 continuous weeks in a calendar quarter."

mbarrera345
Level 1

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

I had a question on this. If 12,000 is paid to a grandparent of a child in a tax year, can this be claimed for the child care deduction? If so, would the grandparent still need to do the 1099-misc to claim the income and get the HSH notation on the 1040 form? With such a high amount, is it necessary to withhold taxes, or as a grandparent, are they exempt from SET?

Hal_Al
Level 15

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

Q. If 12,000 is paid to a grandparent of a child in a tax year, can this be claimed for the child care credit?

A. Yes. All that's needed is for the parent to provide the baby sitter's SS# on the IRS form 2441.

 

Q.  If so, would the grandparent still need to do the 1099-misc to claim the income?

A.  No.  The grandparent  does not need any form from the parent.  The grandparent reports the income based on their own records.

 

Q. Does grandparent need a form, from parent, to get the HSH notation on the 1040 form?

A.  No.  There is no form to input to make that happen.  The grandparent just need to know how to enter in TT (described above).

 

Q. With such a high amount, is it necessary to withhold taxes?

A. There's no need to make the parent do withholding. Grandparent can make quarterly estimated payments if needed.

 

Q. As a grandparent, are they exempt from SET.

A. Only if the grandparent babysits in the parent's home, as discussed above. 

DianeW777
Expert Alumni

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

Yes, it can be used to claim the child and dependent care credit as long as your parent (grandparent of the child) claims the income.

 

No, they do not need any tax form. A parent is an exception to the household employee tax requirement (so called "nanny tax"). But the income IS taxable to your parent(s), particularly if you plan to claim the child and dependent care credit.  You must use their SSNs and address. If it was done in your home, then they should follow the procedures provided by @Hal_Al in this thread.

 

Wages not counted for social security and Medicare wages.  (IRS Publication 926)

Don't count wages you pay to any of the following individuals as social security or Medicare wages, even if these wages are $2,400 or more during the year.

  1. Your spouse.
  2. Your child who is under the age of 21.
  3. Your parent. Exception: Count these wages if both the following conditions apply.
    • a. Your parent cares for your child (including an adopted child or stepchild) who is either of the following.
      • i. Under the age of 18. ii. Has a physical or mental condition that requires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed.
    • b. Your marital status is one of the following.
      • i. You’re divorced and haven't remarried.
      • ii. You’re a widow or widower.
      • iii. You’re living with a spouse whose physical or mental condition prevents him or her from caring for your child for at least 4 continuous weeks in the calendar quarter services were performed.
  4. An employee who is under the age of 18 at any time during the year. Exception: Count these wages if providing household services is the employee's principal occupation. If the employee is a student, providing household services isn't considered to be his or her principal occupation.

Child and dependent care expenses have changed for 2021. You are now able to get a credit for up to 50% of eligible expenses. The amount of eligible expenses has increased from $3,000 for one qualifying person to $8,000. Additionally, for those with two or more qualifying persons, the amount of eligible expenses has increased from $6,000 to $16,000.

@mbarrera345

mbarrera345
Level 1

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

Thank you for your response to my question. We will be claiming the dependent care credit. In TT, do we check the box where it asks "check here if the provider is your household employee" She mostly cares for our child in our home, my mother does not live with us. She does claim the wages as this is her only income and I helped her use the process you had listed in the forum to get the wages on line 1 to list as "HSH 12000" We have never claimed the dependent care credit and have paid 12,000 in child care every year since 2018. Is it too late to file for amendments?

Hal_Al
Level 15

I'm retired and on SS. I took care of my grandchild last year and the parents are claiming child care deduction. Where do I report the income on my taxes?

Q. Do we check the box where it asks "check here if the provider is your household employee".

A.  No.  That will tell TurboTax to prepare Schedule H and  pay the "nanny tax".  Let the the grandparent handle her own taxes.

 

Q.  Is it too late to file for amendments?

A.  No. you have 3 years to amend.  For 2018, you would have to amend by April 15, 2022. 

 

 

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