Do i have to claim my girl friend is my House hold employee??

[JayTayDay]

• I'm paying my girl friend that lives with me and we own a house together to watch my kids.  I'm still married to my first wife and will be fileing taxes as married but filling single. Been separated for approximately 10 years and currently filling for divorce.  But I paid my gf 1100 dollars from a dependant care account to watch my 2 children.  I'm curious do I have to claim her as my house hold employee ? Seeing as she lives there with the kids?  I did ask my provider if I could pay her and they said yes. But turbo tax is acting like they want me to claim her as an employee.  . Any help would be greatly appreciated

[Vanessa A]

Yes, since she is a babysitter, babysitting in your home, she would be a household employee.  You could make the argument that she is babysitting in her home, however, since you are paying her to watch your kids, you are probably paying the majority of the household expenses, so it is still your home.  You would also be in control of at minimum, the hours she is working. 

Because you paid her less than $2,600, you would not need to withhold or pay social security taxes, but since you paid her more than $1,000, you would need to federal unemployment tax on her. 

Because you did not withhold any taxes for her and do not need to pay any Medicare or SS taxes for her, you do not need to issue her a W-2.

So yes, TurboTax is taking you on the correct route for reporting the payments you made to her.  

[xmasbaby0]

You did not ask about this-----but-----if you are claiming your GF as a dependent on your own tax return to get the $500 credit for other dependents, you cannot also enter that she is your babysitter and get the childcare credit.   You cannot use a dependent as a childcare provider and get the childcare credit.

[Opus 17]

First, there is no such thing as "married filing as single."  You can file as married filing separately.  If you provide care in your home for children who live in your home more than half the year, and you claim them as dependents, you may qualify to file as head of household.

If the children live in your home more than half the nights of the year, you can claim them as qualifying child dependents, and they will allow you to claim the dependent care credit or use a dependent care FSA.  However, if the children live in your home less than 183 nights, they are not qualifying children for the dependent care credit or the FSA, even if the other parent gives you a signed waiver allowing you to claim them as dependents. 

Normally, I would say ignore the payment to your live-in girlfriend to watch your own kids.  However, if you used FSA funds and/or want to claim the dependent care credit, you must give the IRS the name, address and SSN of the caregiver, and they will try to match the income on that person's tax return.  So in this case, you would need to treat this person as a household employee.  Because the amount is less than $2700, you don't have to pay social security and medicare tax, but you must pay federal unemployment tax because the amount is more than $1000.

https://www.irs.gov/publications/p926

You are not required to issue a W-2 because the amount is less than $2700, unless you withheld income tax.  You do need to include schedule H on your tax return.

If you do not issue a W-2, your girlfriend should voluntarily declare the "household employee wages not on a W-2", which is reported on form 1040 line 1b.