If I have to list babysitters' SSNs to qualify for the childcare tax break, will this mean these babysitters actually have to file and report the pocket change?

[fuzzychickenbing]

Is there any way to qualify for the child tax credit without these babysitters being forced to file and report the pocket change?  If I report that I paid them less than $1K, then wouldn't they not have to pay taxes on it? 

[Coleen3 · Accepted solution]

No. If they earn the income, they have to report it. Since they are not employees, they will have to include the income as self-employed individuals for any amount over $400.

[fuzzychickenbing]

I thought the threshold was $2100, not $400.  

[Coleen3]

Not for SE income.

[Coleen3]

You usually must pay self-employment tax if you had net earnings from self-employment of $400 or more. Generally, the amount subject to self-employment tax is 92.35% of your net earnings from self-employment.
Jan 28, 2019
Topic No. 554 Self-Employment Tax | Internal Revenue Service

[Hal_Al]

For tax purposes, baby sitters can be classified 2 different ways: 1. Self employed care providers or 2. Household Employees. 

The $400 threshold applies for the self employed. If the sitter cared for the child in your home, rather than hers, she can be classified as a household employee and the $2100 threshold applies. But that threshold is only for social security and medicare tax. Her income would still be subject to income tax. But, because of the large standard deduction, she probably would pay not actual tax.

[Coleen3]

You would have to issue her a W-2 and pay half the SS and Medicare taxes.

[Hal_Al]

Not if she paid her less than $2100.

[Coleen3]

Right!