Under the Wages & Income tab select the "Explore On My Own" option (if presented)
Then scroll down to Business Items and elect to start/update Business Income & Expenses (SCH C)
Since you earned more than $400 at babysitting, you are considered to be self-employed as far as the IRS is concerned, for all income earned in that business. So be aware that you will pay BOTH the employee side and the employer side (Self-Employment Tax) of the taxes on that income, and ONLY on that income.
EDIT: 1/11/2015 -- This post has been here since 2013, and I note folks are still finding it useful for their 2014 tax return. So let me add some additional information to help avoid potential problems due to tax law changes for 2014.
If you had "any" income from babysitting in 2014 regardless of the amount, you need to report that income. If that babysitting income is more than $400, only then will you also pay the additional Self-Employment tax.
IRS PUBLICATION 926
Wages not counted. Do not count wages you pay to any of the following individuals as social security or Medicare wages, even if these wages are $1,900 or more during the year.
Your child who is under the age of 21.
Your parent. Exception: Count these wages if both the following conditions apply.
Your parent cares for your child who is either of the following.
Under the age of 18, or
Has a physical or mental condition that re- quires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed.
Your marital status is one of the following.
You are divorced and have not remarried,
You are a widow or widower, or
You are living with a spouse whose physical or mental condition prevents him or her from car- ing for your child for at least 4 continuous weeks in the calendar quarter services were performed.
An employee who is under the age of 18 at any time during the year. Exception: Count these wages if providing household services is the employee's principal occupation. If the employee is a student, providing household services is not considered to be his or her principal occupation.
Babysitting. If you are paid to babysit, even for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you.
Childcare providers. If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. If you are not an employee, you are probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. You generally are not an employee unless you are subject to the will and control of the person who employs you as to what you are to do and how you are to do it.
In our case, our 14 year old daughter earned babysittying money of $5200 split between two families -- $3000 from one and $2200 for the other. Because under age 18, the employer families not required to submit W2. Our daughter files earnings under Form 1040, Line 7, Miscellaneous Income.
Pub 926 was an attempt to better clarify the "nanny gate" issues that started several years ago. If under age 18, the babysitter is not required to pay SS/Medicare tax but is still responsible for income taxes (if income high enough to trigger). Also allows babysitter to open Roth IRA using earned income.
I only earned $1440 in babysitting for part of the year in 2014 with no expenses and because of that, TurboTax wants me to pay $79 to use their upgraded version. Sorry, TaxACT is much less expensive.
You are considered a Household Employee. Household employees under the age of 18 are not considered self-employed business owners for tax purposes and so they do not pay self-employment tax. If that's the case, then you would merely include your household employee income on Line 7 of Form 1040 and note “HSH” and the related subtotal amount on the dotted line to the left of the line 7 total amount (Google "Teens and Taxes").
Whether the babysitter is an employee or self-employed depends on the terms of the employment agreement.
If you filed, it is like dropping it into a mailbox - you cannot get it back.
You'll have wait until your return is either accepted or rejected.
- If rejected, you can make any necessary changes.
- If accepted, you'll need to amend your return.
- To avoid unnecessary delays, do not amend until your original return has been fully processed. You will need to print and mail the amendment.
- Allow 8-12 weeks for processing.
See this TurboTax FAQ for help with amending.
You can check the status of your amended return here, but allow 3 weeks after filing for it to show up.
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