House employee or self-employed?

[garrapatta]

Hello,

I babysitted my nieces for several days in 2024 and my sister paid me $1,300 from her FSA child care allocation. How should she report it? Am I considered a house employee or self-employed? I watched the kids at her house. This was just a one time thing. She really needed a babysitter. She lives in Utah and I’m in CA. Thank you!

@ErnieS0 

@DianeW 

[xmasbaby0]

She does not need to issue any kind of tax document to you for that amount.   But when she enters the money she paid to you on her tax return in order to claim the childcare credit, she needs to enter a Social Security number or Tax ID for the childcare provider that she paid.  So you will file your own tax return, and the amount you enter has to match that.   You received "self-employment" income as a babysitter for which you will pay self-employment tax for Social Security and Medicare.   You are required to file if you have even $400 of self-employment income.

The online version of TurboTax that you need is expensive, so you might want to explore these possibilities:

-Use this IRS site for other ways to file for free.  There are 8  free software versions available from the IRS Free File site

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

Or—if you live in certain states you may be eligible to use the new IRS Direct File

In Filing Season 2025, Direct File will be available in Alaska, Arizona, California, Connecticut, Florida, Idaho, Kansas, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin, and Wyoming. 

https://directfile.irs.gov/

https://home.treasury.gov/news/press-releases/jy2629

[xmasbaby0]

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

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

[garrapatta]

Thank you for your prompt response. I watched the kids at her house. Will I still be self-employed or house employee? 

[xmasbaby0]

You are self-employed.   You did not earn enough to be called a "household employee."    Your sister does not have to issue a W-2 to you; she is not a business, so she does not have to issue a 1099NEC to you.   But you have to report the income on a tax return even without a document.