Does my dependent daughter need to file?

[rkcampbellfamily]

My daughter is 14 and made $850 babysitting last summer.  It was paid in cash.  She did it at their house.  They are including that on their tax return and want her social security number.  She doesn't need to file for that, does she?  

[xmasbaby0]

If they had your child babysit so they could work then they are using the childcare credit on their tax return, and yes, your daughter will have to report it on a tax return of her own.    I would not give them her SSN.   Get her a Tax ID instead:

https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin

MY DEPENDENT HAD A JOB

If your dependent has a W-2 for his after-school job, summer job, etc. you do not include the information on your own return. You can still claim your child as a dependent on your own return.  He/she can file his own return for a refund of some of his withheld wages (he won’t get back anything for Social Security or Medicare), but MUST indicate on it that he can be claimed as a dependent on someone else’s return.  (Supervise this closely or prepare it for him!)

If your dependent’s earnings were over $400  paid in cash or were reported on a 1099Misc or 1099NEC then she must file a return and pay self-employment tax for Social Security and Medicare.

You might also want to use free software from the IRS Free File versions:

https://apps.irs.gov/app/freeFile/

[Vanessa A]

Yes, because she earned more than $400 in self-employment income she will need to file a return even though she is 14 and a dependent. 

[rkcampbellfamily]

She's not self employed though.  She worked in their home.  My understanding was she would be considered an employee then.  The example I read somewhere on here was if she babysat in our home she's self employed.  Since she didn't she isn't. She would be considered their employee.  And she doesn't come close to earning 12,550. It's too confusing....

We didn't receive anything from them - no 1099 or anything.  Or W-2.  When I put this in turbotax her liability is zero.  I entered in under Misc income.  I am not understanding why she would need to file.  

[xmasbaby0]

No----since she earned only $850 she is not a "household employee,"   so they are not required to issue a W-2.   She was paid in cash with nothing withheld for SS or Medicare and the tax law says she has to pay self-employment tax for that if she earned even $400.     When the child's parents use the child tax credit on their tax return they are going to enter her SSN or Tax ID to get the credit.  The IRS will be looking for a tax return filed by your daughter that has a matching amount on it.     She is going to owe about $130 in self-employment tax.

[rkcampbellfamily]

ok.  thanks.  I'm going to say her job wasn't worth it last summer.....  :(  We will take care of it.

Another question though -the mom told me my daughter didn't need to file (which I questioned) because in previous years their older daughter did this and they paid her and she did not have to file.  Is it because she was family?  Or did they just fail to report it? 

[xmasbaby0]

@rkcampbellfamily They could not get a childcare credit for paying their own daughter for babysitting because they were claiming her as their dependent.   They cannot get the credit if their childcare provider was claimed as their dependent.   Maybe they are unaware that your daughter now has to pay tax on her earnings if they use that child care credit, but alas, she does have to pay.   

 Was she in fact babysitting so they could WORK?   They cannot get the credit if she was babysitting while they went out to dinner, etc. and paid her for those times.  The child care credit can only be used if they paid her to watch their child while they worked.

[rkcampbellfamily]

Yes, they were working.   Thanks for your help.