It depends on whether the caregiver is considered a household employee or a self-employed worker. If you hired a household employee to work in your home, you may be required to pay employment taxes, including Social Security, Medicare, and unemployment.
You're required to file a Schedule H if you paid:
- Any one worker $2,000 or more during the year;
- Any one worker, regardless of payment amount, if you withheld income taxes for them; or
- Total wages of $1,000 or more during any three-month period to all your household employees in the past two years.
This gets reported on Schedule H, Household Employment Taxes (see instructions below for how to enter into TurboTax).
If you hired a self-employed worker, then that individual is responsible for his or her own Social Security and Medicare taxes (the self-employment tax). A self-employed worker is someone who controls how the work is performed, and provides his or her own supplies and equipment. You will not be able to give the caregiver a 1099-MISC since individuals cannot issue 1099s using their social security number. They will need to report the income on their tax return.
A household employee is anyone you pay to provide domestic services in your household, such as:
- Babysitters, nannies, au pairs
- Caretakers, health aides, private nurses
- Housekeepers, maids
- Gardeners, landscapers, yard-keepers
- Drivers, chauffeurs
- Personal assistants, personal chefs, cooks
TurboTax personal versions (except Free Edition/Absolute Zero) handle Schedule H, Household Employment Taxes. Here's how to fill one out:
- Open (continue) your return in TurboTax.
- In the search field, search for household employee taxes, sch h (use this exact term including the comma and space) and then click the "Jump to" link in the search results.
- Answer Yes to Did You Have a Nanny or Household Employee? and follow the onscreen instructions.
