grandparent babysitting grandchild. How to enter the income?

[Anonymous]

My daughter won't be generating any tax form for the payments ($5k) she made to me for babysitting her child. How do I enter the income into TurboTax?  The funds came from her child-care savings account at her employer.

[MichaelG81]

It depends, if she is not generating a 1099-NEC for you, you must still report. See below for a list of common expenses for self-employed.

Childcare or eldercare provider

As a self-employed caretaker, babysitter, or nanny, here are some additional expenses you can deduct, in addition to those listed above:

• CPR certification, first aid training
• Miscellaneous supplies such as diapers, food, toys, books
• Liability insurance
• Advertising, including websites
• Business portion of mobile phones, data plans, or a second phone line
• Vehicle expenses or standard mileage
• Work-related education or training
• Licenses and permits, membership dues
• Fees for legal or professional services (Childcare only)

You can't write off these expenses if you're not self-employed, for example if you're a household employee who was hired through an agency.

These out-of-pocket expenses will offset (reduce) your earnings, lowering the amount of income you pay taxes on.

In the search menu type "schedule c" with the space, click the blue jump to link and enter your information and go through interview. 

It will ask for your address and business info, I know you may not think you have a business per se, but the IRS labels it as one because you are making money that can have some expenses written off at the very least for business use. 

So you may want to save mileage if picking up kid at school or paying money out of yours for supplies, etc., unless a household employee, as labeled above.
 

If it's directly related to the work you do, you can deduct it as an expense. See below for a list of common expenses most self-employed taxpayers will want to review.

Work-related expenses reduce your taxes by lowering the amount of self-employment income you get taxed on. For example, if you made $50,000 in self-employment income and had $5,000 out-of-pocket expenses, you'd only get taxed on $45,000.

For state-specific questions regarding your work, contact your state’s Department of Revenue.

We also have instructions for entering your self-employment expenses in TurboTax.

 

Common expenses for most self-employed taxpayers

[Anonymous]

That's really wonderful information and thank you. Still, I thought the case of being a grandparent, with a casual and irregular schedule for babysitting, at my house, there was not any kind of schedule. C requirement of any kind. And hopefully no requirement to pay any social security or Medicare tax.

[Anonymous]

Additional info. I'm retired and my income is only social security and pension.

[DaveF1006 · Accepted solution]

You still need to report this as self-employment income even though you are not technically a business. This is because you earned more than $400 for the year. This is an IRS regulation even if there may not be any paper trails to pursue.

It is true however, your daughter can exclude up to $5000 of the employer benefits and not have this income taxed as taxable income on her part. 

With this said, you make the decision on whether or not to report this since your daughter is not going to report her childcare expenses. Let your conscience be your guide as i can only advise you to report it as self-employment income.

If you report:

1) Select the federal tab in the left navigational screen in your return

2) Select wages and income at the top of the screen and then select add more income

3) Select Self-employment and then select show more

4) Select Self-employment income and expenses and then select start

5) Just follow the interview and answer the questions as they are asked. You will need to complete the profile section of your business.  Even though this isn't technically a business, it is considered a business for tax reporting purposes. You can enter babysitting as a description for the business

6) After this is complete it will ask for income information.   Enter this as other common income.

7) After this is complete, the program will try to find deductions unique to your work. After the program finishes doing this, you can now enter expenses for your business. Make sure you list all of your expenses as MichaelG81 suggests. Turbo Tax may also suggest expenses you can claim that will lessen your income and self-employment tax burden.

@Anonymous 

[TomD8]

The IRS says:

If the parent is performing services for the child, but not for the child’s trade or business:

• Payments for services of a parent are not subject to social security and Medicare taxes, unless the services are for domestic services and each of the following apply:
  • You employ your parent,
  • You have a child or stepchild living in the home,
  • You are a widow or widower, divorced, or living with a spouse, who because of a mental or physical condition, can't care for the child or stepchild for at least 4 continuous weeks in a calendar quarter and
  • The child or stepchild is either under age 18 or requires the personal care of an adult for at least 4 continuous weeks in a calendar quarter due to a mental or physical condition.
• Payments for services of a parent are not subject to FUTA tax regardless of the type of services provided.

https://www.irs.gov/businesses/small-businesses-self-employed/family-help

[Anonymous]

Thank you, and all, for great info.  I will now be able to enter the income, and also enter the maximum & fair expenses deduction.  The original reason for asking the question was because I had the income, but there was no tax form, and I didn't know best place & method to enter the income.  Now I know.  THANK YOU!

[richardR1]

Hi if I was paid in 2024 out of child care funds my son received from work but it was for 2023 child care which year does the income get reported?

[TomD8]

@richardR1 --

As a cash basis taxpayer, you report the income in the year the payment was made available to you (the year you received the cash or check).