Independent contractors do not always get 1099-Misc, especially if they work for several individuals. She should have kept track of the money earned and filed as self-employed.
If she was a housekeeper in one home only, it is possible she was a household employee. If she was, she should have received a W-2.
for 2016 and 2017, an employer needs to pay Social Security and Medicare taxes
for “cash wages” of $2,000 or more paid to any one employee. Cash wages refer
to checks, money orders and the like. They don’t include “the value of food,
lodging, clothing, transit passes and other noncash items you give your
household employee.” But cash given to an employee in place of those items
counts as cash wage.
- Form W-2 is due January 31. The IRS specifically asks that you allow the employer until February 15 before you report it missing. The January 31 date is the ‘mail by’ date.
- It is February 15 and you still do not have a W-2. First step is to phone the employer. Often the nanny has moved and the employer does not have a valid mailing address. Allow two additional weeks if you needed to update your address for the employer to obtain/generate a replacement.
- The employer does not intend to give you a W-2 or intends to provide a 1099. The next step is to remind the employer that as a nanny you are entitled to a Form W-2. The employer is responsible to remit the Social Security and Medicare taxes, as well as pay unemployment insurance. The employer is NOT responsible for the nanny’s income taxes unless it was agreed to in the written work agreement (rather rare). The IRS Publication 926 is a point of reference to reinforce this.
- Phone Support from the IRS. The IRS encourages employees in this situation to phone 1-800-829-1040 for guidance. In our experience, you will be told the same information as what is contained here, and wait on hold a VERY long time to get this information!
- The employer still refuses to provide the W-2 Form. Please see the two scenarios below.
The IRS considers undocumented cash income (no W-2 or 1099-MISC), for work performed, to be self employment income. Enter at "Business Income & Expenses" and TurboTax (TT) will complete Schedule C or C-EZ for you and allow you to deduct any expenses associated with this income. You'll also have to pay self employment tax (social security) on any profits greater than $400.You report the income from your own records.
You may have to upgrade to
the Self Employment version of TT. You will not be able to use the free version.
TurboTax also has another free product called the FREEDOM Edition (not to be confused with the regular Free Edition). It has free Federal preparation and free State preparation. There is no efiling fee. It is not available after October 15
The FREEDOM Edition can handle a 1099-MISC or cash self employment
The Freedom Edition is more fully-featured than the regular Free
Edition. The Freedom Edition can prepare Schedule A, C, D, E, and F that
the Free Edition cannot. It will prepare a Form 1040 or 1040A or 1040EZ.
For Freedom Edition a user needs to meet only ONE of these qualifications:
· AGI of $33,000 or less
· or active duty military (including Reservists and National Guard) with a military-issued W-2 and a 2016 family AGI of $64,000 or less
· or eligible for EIC (Earned Income Credit.)
The FREEDOM Edition is located at:
How to switch and start over in Freedom Edition