Do I need a 1099 form for babysitting? Im not contracted but I get paid more than 400

[whitneysanders95]

Do u still need to be given a 1099 form if the parents dont see u as their employee and its a casual thing in their eyes? I have a regular schedule and Made over the 400 with them. I watch them at my house and then 1 day at theirs. Its not really a business i just know the family and they asked me to watch them. The parents provide their lunch for them so i dont have to pay to feed them or anything. They dont tax my pay either because they say im self employed. But other sights say differently. So would you say I'm employed or self employed? Should they provide me with a 1099? Should they tax my pay?

[MinhT1]

As a babysitter, you are considered as self-employed and have to report your self-employment income. If it is more than $400, you are liable for self-employment taxes.

As a private individual, the parent do not have to provide you with a form 1099-NEC (as they are not a business). But you still have to report your income.

You just report the income you received in cash, checks or bank transfers or without a 1099-NEC as self-employed income under Other self-employed income.

• In business income, just under Type of Income, click on Add Income for this work
• On the next page, click on the radio button next to Other Self-employed Income
• Click Continue to enter your income received in cash, checks or bank transfers.

[whitneysanders95]

So they don't have to take taxes out of my pay then? I'm just confused because various websites have said differently,

For instance :

If you control how the work is performed, the babysitter is a household employee. If the babysitter controls how the work is performed, the babysitter is self-employed.

Another says:

A babysitter is considered a household worker/employee, and if you paid $2,100 or more in 2019 you would have to withhold employment taxes since they would qualify as an employee, unless they are under 18 then there are exceptions to this rule.

This said:

The I.R.S. also considers what you paid the worker. For tax year 2014, the cutoff is $1,900 for the year, or $1,000 in a quarter. “Once you cross that threshold, the I.R.S. considers you an employer,”

And ...

The person you babysit for should provide you with a Form 1099-MISC if she pays you more than $600 during the tax year. You are required to report any income you receive from babysitting, regardless of the amount, regardless of whether you're paid by cash or check and regardless of whether or not you receive a Form 1099-MISC.

I don't babysit anyone else and this is my only income, so these sites are wrong? 

[KathrynG3]

No, the sites are not wrong. If you meet the requirements, then yes, they should be treating you as an employee. See Tax Tips for Nannies and At Home Care Givers.

But, the reality is that this family did not withhold any taxes in 2020, so they are treating you as self-employed for that timeframe.

Therefore, at least for 2020, you must report the income as self-employed income.

For 2021, there are two options:
 

Option Schedule H filed by the family: Your taxes are withheld for you, there are no deductions.

• The family must file Schedule H,
• potentially handle payroll themselves or retain a payroll service to withhold federal and state taxes out of each paycheck,
• they must pay their half of social security and Medicare taxes, 7.65%
• file your payroll taxes quarterly and annually,
• as well as issue Form W-2 at year end,
• and pay Federal and State Unemployment Taxes.
• You will receive income after taxes
• You would not be able to deduct any expenses.

Option Self-Employed:

• Alternatively, you are in control of saving and paying your own taxes.
• Taxes should be paid four times a year both at the federal and state level.
• You would need to set aside 15.3% for social security and Medicare to be paid 4 times a year in addition to any federal and stay income taxes.
• Deduct related expenses such as if you bought the children anything, and other ordinary and necessary expenses.
  • Being able to deduct expenses means less tax will be charged. 
  • See What tax breaks can I get for my 1099-MISC or 1099-MISC?, which applies to you, even without Form 1099-NEC.

If you choose to be self-employed, check out QuickBooks Self-Employed. This can keep track of everything on an app. You can hook up your bank to it and categorize any expenses. It will also help you keep track of your mileage of 56 cents/mile and help calculate your estimated taxes due so you pay them on time 4/15, 6/15, 9/15 and 1/15. Click here for steps How do I access QuickBooks Self-Employed?

@whitneysanders95

[whitneysanders95]

Thank you so much. So for this year now. All they have to do is file a schedule H? And have my pay taxed? Anything i should do? No 1099 forms?  Also, do you need to be licensed to babysit 2 children in your and their homes?

[DMarkM1]

For this year the parents are not filing a Schedule H as they appear to be treating you as self-employed.  They should issue you a form 1099-NEC, but you are responsible for reporting your income whether or not they issue a 1099.  

You will enter your childcare income and expenses in the "Self-employment" topic under the "Income & Expenses" tab.

The licensing question is not a tax issue, but a state/local legal issue so we can't respond to that question in this forum.

[whitneysanders95]

Okay so with the new tax year, they cant issue me a w-2? By law aren't I considered an employee not self employed since I dont work for a business and they pick the hours and time and its my only source of income? So shouldn't this time around, they start witholding taxes out of my pay and treat me like an employee? If im an employee in the eyes of the IRS?

[DawnC]

If you do the babysitting in their home and follow their rules, you are considered their household employee and they should be handling the payroll taxes, filing Schedule H and issuing you a W-2 at the end of the year.   

However, any care you provide in your own home is self-employment income to you and filed on Schedule C.   Since they did not do what they should have done, you can choose to file all the income on your own Schedule C and pay the self-employment taxes and have them reimburse you for their portion.   Technically, they should pay half and you pay half since you are an employee.    You can decide with the family the best way to handle the 2020 return.   

If you want them to issue you a W-2 next year and handle the taxes for 2021, they need to get that set-up now and start withholding.   The IRS just wants the income reported and the associated taxes paid.   

You can be both their employee and self-employed if you provide care in your home and in the parents' homes.  But yes, you are an employee for the care you provide in their home.  You could insist that they issue you a W-2 for 2020 and the IRS would agree, but that doesn't really help you or them at this stage.   If you provide care in your home for other children, that income goes on Schedule C and you can report the income you earned while working in their home on that same Schedule C for 2020.   And yes, if you want them to give you a W-2 next year since you are their employee, they should start paying you as an employee which means paying and/or withholding payroll taxes on your behalf.    @whitneysanders95