Grandparent babysitting grandchild

[TiffineyH]

I wanted to know in advance how would the best way to go about being paid to babysit my grandchild/grandchildren and options available. The pay right now would be  estimated at $600 a month at week $150 and trying to see if better to have it received as a gift or have them be able to claim child care dependent taxes and me claim as income and how would each of us go about that tax wise as well. 

[xmasbaby0]

Where will you be doing the babysitting----in your own home or the home of the baby and the parents?   If you call the income  a "gift" (which it is not) the parents cannot claim the childcare credit and they get no tax benefit.     In order for them to get the childcare credit, they have to show your SSN on their tax return and report how much they paid you.   And then your own tax return must show a matching amount for the income you received for providing the childcare.   

If you provide the childcare in your own home, you would report the income as self-employment income and pay self-employment tax -- for Social Security and Medicare, and possibly ordinary income tax--depending on how much other income you are receiving.  You would also prepare a Schedule C for any expenses you incur such as expenses for food, snacks, diapers, toys, etc etc.

If you have self-employment income for which you will pay self-employment tax for Social Security and Medicare,  you will need to use online Premium software or any version of the desktop software download so that you can prepare a Schedule C for your business expenses.

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/turbotax-support/en-us/help-article/import-export-data-files/enter-self-empl...

If you babysit in the parents' home, you could be considered to be a "household employee" and they can issue a W-2 to you, which, of course, would be entered on your  own tax return if you have enough income to meet the filing requirement.

Please see the links regarding household employees.   There are exceptions to the SS and Medicare withholding rules for grandparents who are babysitting as "household employees" -- so your grandchild's parents are not required to withhold SS and Medicare from your pay.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/taxation/considered-household-employee/L...

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-payments/pay-taxes-pay-household-emp...

[xmasbaby0]

Some additional information----

If you have self-employment income of even $400 you are required to file a tax return and pay self-employment tax for Social Security and Medicare.

If you have W-2 income you need to file a tax return if you have more than the standard deduction amount for your filing status.   You have not mentioned your filing status.      OR if you have a 1095A for marketplace health insurance, you are required to file, no matter how much income you received.

2025 STANDARD DEDUCTION AMOUNTS

SINGLE $15,750  (65 or older/legally blind + $2000)

MARRIED FILING SEPARATELY $15,750  (65 or older/legally blind +1600)

MARRIED FILING JOINTLY $31,500  (65 or older/legally blind + $1600)

HEAD OF HOUSEHOLD $23,625 (65 or older/legally blind + $2000)

Who has to file?

http://www.irs.gov/uac/Do-I-Need-to-File-a-Tax-Return%3F