Due to COVID for three months we sent our baby to free lance Baby sitter at her home. The Baby sitter is requesting for 1099 misc so that she can report income in her taxes, my question is as I don’t have any business myself can I initiate 1099 misc to baby sitter ? I’m hearing that 1099 NEC replaced 1099 misc but does that apply for baby sitting? And if so as I don’t have any business and just being individual can I initiate either of these to Baby sitter?
She does not need for you to create a 1099NEC for her. She can report her babysitting income without that. You are not required to issue a 1099 to her. You do need her Social Security number or Tax ID so that you can enter the childcare credit on your own tax return.
No. You do not have to issue a 1099-NEC because you didn’t make those payments in the course of your business just as you would not give one to a contractor who remodeled your home. The baby sitter must report that income but doesn’t need a 1099 to do it.
Sounds like she is new to babysitting and reporting her income.
If your self-employment income was only from cash, personal checks, credit card payments, or cryptocurrency
Open your return and type Schedule C in the Search box. Select the Jump to link. This will take you to where you can enter any cash, personal checks, credit card payments, or cryptocurrency (Form 1099-K) related to your self-employment. You may first be asked some general questions about your business. After you answer them, you’ll be taken to the Let's enter the income for your work screen. Select Other self-employed income and provide all necessary information.
In Turbo Tax.....
To report expenses she would have to use the online Self Employed version or any of the desktop programs. That is self employment income. She can report her income without a 1099 as Cash or General income. Only the total income goes to schedule C.
Here's my general notes.
You need to report all your income even if you don't get a 1099NEC or 1099Misc. You use your own records. You are considered self employed and have to fill out a schedule C for business income. You use your own name, address and ssn or business name and EIN if you have one. You should say you use the Cash Accounting Method and all income is At Risk.
After it asks if you received any 1099Misc it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records. Just go through the interview and answer the questions. Then you will enter your expenses.
Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040. The SE tax is already included in your tax due or reduced your refund. The SE tax is in addition to your regular income tax on the net profit.
Here is some IRS reading material……
IRS information on Self Employment
Publication 334, Tax Guide for Small Business
Publication 535 Business Expenses