They do not need to give you a W-2, even for them to claim the dependent care credit (DCC). Since you sat the kids in their home that makes you a household employee and not a self employed person. But because you are the parent, of the taxpayer, you are exempt from the "nanny tax". That is they don't have to pay social security and medicare (FICA) tax and neither do you.
You will file the income as a Household employee. The money goes on line 7 of form 1040 (or 1040-A) with the notation "HSH". It's a little tricky entering in TurboTax. In TurboTax, enter at:
Federal Taxes
Click on Wages and Income
Click on Explore on My Own
Scroll down to Less Common Income
On Miscellaneous Income, 1099-A, 1099-C click the start button
On the next screen click the start button on Other Income not already reported on Form W-2 or Form 1099
Answer Yes on the next screen and enter the amount under Household Employee Wages
Three side notes:
1. A parent (as a Household Employee) is exempt from Social Security and Medicare taxes UNLESS they are watching the child and the parent is divorced (and not remarried) or widowed.
https://www.irs.gov/publications/p926/ar02.html#en_US_2014_publink100086740
2. You MIGHT not be required to report this as income at all, because it is only a transfer of money between family members, and could be considered a gift, under the right circumstances. But, in order for them to claim the day care credit, you must report it as income.
No. I am watching my grandaughter. I have no other income
They do not need to give you a W-2, even for them to claim the dependent care credit (DCC). Since you sat the kids in their home that makes you a household employee and not a self employed person. But because you are the parent, of the taxpayer, you are exempt from the "nanny tax". That is they don't have to pay social security and medicare (FICA) tax and neither do you.
You will file the income as a Household employee. The money goes on line 7 of form 1040 (or 1040-A) with the notation "HSH". It's a little tricky entering in TurboTax. In TurboTax, enter at:
Federal Taxes
Click on Wages and Income
Click on Explore on My Own
Scroll down to Less Common Income
On Miscellaneous Income, 1099-A, 1099-C click the start button
On the next screen click the start button on Other Income not already reported on Form W-2 or Form 1099
Answer Yes on the next screen and enter the amount under Household Employee Wages
Three side notes:
1. A parent (as a Household Employee) is exempt from Social Security and Medicare taxes UNLESS they are watching the child and the parent is divorced (and not remarried) or widowed.
https://www.irs.gov/publications/p926/ar02.html#en_US_2014_publink100086740
2. You MIGHT not be required to report this as income at all, because it is only a transfer of money between family members, and could be considered a gift, under the right circumstances. But, in order for them to claim the day care credit, you must report it as income.
Hal_Al
How would my son file childcare if I. his mother, watch their daughter in their home. (You answered my questions yesterday) He uses Turbo Tax
Because I am the parent and watch my grandchild I was told I am exempt from the Nanny Tax and they would be also. How do they file that?
They don't need to file anything to show they are exempt from the Nanny Tax. They simply file for the Dependent Care Credit, including providing your SS# on form 2441.
If the IRS wants to do any checking, they'll audit your return, not the parents. And that's very unlikely given the circumstances. Even if you are audited, the facts are straightforward.
If you are watching your granddaughter in your home (not hers) you would be considered self-employed, and report the income as business income subject to income and social security taxes. You would either need the Home and Business version of the program (if done on-line), or Deluxe or higher if you use a desktop program.
If you watch them in their home you would likely be their employee for that work. They should provide you with a W-2 at the end of the year that you would report as wages. They need to do that if they want to claim the child and dependent care credit.
Babysitting income is usually self employment income. The income and expenses must be reported on Schedule C of IRS Form 1040. The IRS requires you to file if you had at least $400 in earnings from self-employment.
To enter your babysitting income into TurboTax follow these instructions:
If you're caring for a relative, and you don't have a profit motive; rather you're doing it to help the relative, you wouldn't be subject to self-employment tax. However, you would need to report the payments as taxable income on Form 1040, Line 21. While in TurboTax follow these steps:
@Tosha Kay - How old were you on 12-31-19? Did you baby sit in your aunt's home or yours? Are you your aunt's dependent?
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 & medicare tax) on any profits greater than $400.
You report the income from your own records.