Do I need to provide a 1099 or W-2 to a nanny who will be taking care of my child at her home while I work? Wages will be more than $2K annually and she older than 18.

[lentilcounter]

The nanny is providing the nanny care in her home and with minimal input from me. The nanny is not my parent, spouse, etc. I will provide items such as milk, diapers, etc. I've looked at IRS publication 926 and I don't think she is a household employee because the services are not being provided at my home. Do I need to provide her with any tax documents or withhold taxes for her?

[HelenaC · Accepted solution]

No, she is not a household employee. She is self-employed as a caregiver/babysitter/nanny, etc., doing business as a sole  proprietor.  You do not need to issue a W-2 or a 1099-MISC Compensation form to her.  

She has to give you her Social Security Number or Employer Identification Number (if she has one) and the dollar amount you paid her, so you can complete Form 2441, Child and Dependent Care Expenses - IRS.gov, on your personal income tax return. 

To enter your daycare expenses, click on How do I get to the Child and Dependent Care Credit in TurboTax?

[lentilcounter]

Thank you! Appreciate it!

[HelenaC]

You're very welcome and thank you for using TurboTax. We really appreciate it!

[dkelusky]

I have a similar question I want to confirm.  I'm going to potentially hire a nanny who will take care of my son.  All work will be in the nanny's home but I will likely give instructions on how to perform the care and provide supplies like diapers and food.  Would this nanny be a household employee?  Or, since all the work is at the nanny's home can I use that fact alone to say this is not a household employee?  

Furthermore, is there anything I need to fill out in advance to verify or document this isn't a household employee?  Perhaps a contract with the nanny or a specific IRS form to confirm this?

[xmasbaby0]

If the babysitter is providing the childcare in her own home she is NOT your household employee.  She is a childcare provider for you.  You need her Social Security number or her Tax ID so that you can enter the amount you pay for childcare on your tax return in order for you to get the childcare credit.  The babysitter is responsible for reporting her income on her own tax return.  The amount you pay her and the amount she claims on her own tax return must match--the IRS does cross match.

There is no special form you have to fill out.  Do be clear from the start with the babysitter that you will be reporting the childcare expense on your tax return so that she knows she must keep good records of how much she is paid.  Write checks to her so you have a paper record of your expenses.