Household employee or independent contractor (self-employed)

[khongkhong]

Hi,

I would like to ask. I get paid $6,000 in cash from my son for babysitting his children in his house. He didn't give me any W-2 or 1099 and he wants to claim that money as Child and Dependent Care Credit. In this case should I claim my income as "Household employee" or "Independent Contractor"?

Please correct me if I'm wrong, some of my friends tell me that because I'm the grandmother and doing nanny job at my son's house so I don't need W-2 and I can claim my income as "Household employee". Is it right or wrong??

Besides, is it an obligation to submit W-2 if we claim as household employee 

Thanks a lot,

[MargaretL]

In your case, you are a household employee... but you don't need a W2; grandparents are exempt. You should simply report the income as miscellaneous income. Here are the steps to do so in TurboTax:

1. Federal tab
2. Wages & Income section
3. Select Less Common Income
4. Select Miscellaneous Income 1099-A, 1099-C
5. Select Other Income Not already reported on a form W-2 or Form 1099
6. Enter amount received as Wages Earned as a Household Employee

[khongkhong]

Hi,

I would like to say thank you very much for your reply. I claimed my cash income in Wages Earned as a Household Employee and the software showed that I got refund $461, that's make me very confused

  1. My son claimed his paying cash $6,000 in Child and Dependent Care Credit and got refund $1,200

  2. I claimed my income cash $6,000 as Household Employee and got refund $461

Why all of us got refund from IRS? I assumed either of us should pay TAX right? So in this case, did I or my son do anything wrong??? And how can we fix it in Turbo Tax

I'm very appreciated for your help.

[MargaretL]

You have done nothing wrong and it's entirely possible that both of you will get a refund. Your tax situations are entirely different. The tax and refund is based on all your other income, all the credits/deductions that you qualify for, and any tax withheld. 

As long as you have gone through all the areas in TurboTax, the program calculates your refund based on your individual situation. The same goes for your son. You don't have to fix anything in TurboTax. 

"Why all of us got a refund from IRS?" This year, there are many changes to the tax law due to the Tax Reform,  the standard deduction is doubled, for example, many taxpayers will benefit from that change; possibly you as well.