How do I report the income I made watching 2 children in my home when I file my tax return?

[bears_andy]

I'm not a licensed childcare provider, I just provide care to 2 families during the week. I'm not sure if I will need to be using a certain form to file the income I made or not. I'm also not sure what information I need to give to the parents, besides the amount they paid me, so they will be able to report it on their taxes as well.

[Carl]

Doesn't matter about licensing. You provided child care services for which you were monetarily compensated. As far as the IRS is concerned, you are "self employed" for that activity. You'll need at least TurboTax Home & Business, and you'll report your child care income and expenses in the business section of that program. That will produce a SCH C which is filed as a part of your personal tax return.

You're also required to provide the parents with the total amount they paid you in 2014, and either your SSN or TIN so they can claim the childcare deductions on their tax return. By federal law, you are required to provide them this information. Now, many folks (myself included) have a problem with providing my SSN to others. So you can obtain and provide the parents a TIN (Tax Identification Number) which they can then use on their tax returns. To obtain an TIN for your childcare business, simply go to http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-... and start there. Do note that as it states on the website, it's down for planned maintenance through Jan 5, 2015. So you'll have to wait a day or two to actually apply for a TIN on line. Only takes a few minutes, and your TIN is issued within the hour after you complete the online application.

[TaxGuyBill]

Also, if it is not legal in your area to watch 2 families without a license, you are not allowed to deduct your home office expenses.

[kristiemgray]

what do you use for a form to provide the parents the amount they paid you

[VolvoGirl]

You don't need to give them anything.  You can just tell them the amount.  They will need your ssn or EIN if they want to deduct the Child Care they paid.

[VolvoGirl]

Starting in 2014 (2013 for Online versions)  you will need to use the Home & Business version to fill out schedule C for self employment.

If you have Net Self Employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099Misc for some of your income but you need  report all your income.  So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf

Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% for 2014 SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.
 
HOW TO ENTER SELF EMPLOYMENT INCOME:
The Business Tab - Continue
Choose Explore on my own or I'll choose what to work on  (if it comes up)
Business Income and Expenses
Then….
Profit or Loss from Business, click Start or Update

You use your own name and ssn or business name and EIN if you have one.   You should say you use the Cash Accounting Method and all  income is at risk.  After you put in your income and expenses  if your net profit is $400 or more you will pay 15.3% for 2014  Self Employment tax in addition to your regular income tax.  The Schedule SE will be automatically filled out for it.

After it asks if you received any 1099Misc it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records.  Just go through the interview and answer the questions.   Then you will enter your expenses.