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My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

I received my W2 with a Box-10 $5,000. Do you think it's okay if I don't report this on my tax return? I don't plan on claiming any child care benefits as well.

 

 

Anne0907
New Member

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

So if I prepare W2 to my mom for $5,000 in 2019, is box 1 the only that indicate the wage $5,000. Since the social security wage, medicare wages and their taxes are excepted from nanny taxes, they should be blank, right?

 

thanks

Hal_Al
Level 15

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

@Anne0907 - Right.

Anne0907
New Member

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

Will IRS have any question on W2 that are blank, except for Box 1 with $5,000? Do I need to include any paperwork to indicate that she is household employee and  also my parent so there is no need to pay any taxes? if not, how can IRS know all the facts?

 

 

Thanks so much. 

Hal_Al
Level 15

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

Any way you do it is a red flag. I would not give her a W-2, but would have her file as HSH, as described above.  If she wanted to sh could attach a statement (I wouldn't).

 

If you want to give her a  W-2, you want to post  a fresh question about how to file a W-@. I'm not familiar with that procedure. 

gardnerds
New Member

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

If the grandparent earned only babysitting income under the HSH no-nanny tax situation, are they potentially eligible to claim EITC (earnings around $6000)? 

 

Also, would the wages show up on Schedule 1 line 8 (other income) and then get totaled into 1040 line 7a?

 

Thanks for the help!

Hal_Al
Level 15

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

@gardnerds 

Yes, the grandparent is eligible for EIC, because it is earned income.  It goes on line 1 of form 1040 with the HSH notation. See above for how to enter in TT.  Anything on line 8 of Schedule 1 is NOT earned income.

 

We have seen cases of grandparents claiming EIC being questioned by the IRS, in this situation. Keep records. At a minimum pay by check.

gardnerds
New Member

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

Thanks for the clarification, I misread your earlier info. If she's filling out the form manually she can just enter it on line 1 of 1040 with HSH, and doesn't need to have additional forms attached (ie like you would with a w-2)?

Hal_Al
Level 15

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

Q.  If she's filling out the form manually she can just enter it on line 1 of 1040 with HSH, and doesn't need to have additional forms attached)?

A. Yes. 

The HSH goes on the dotted line to the left of line 1 with the mount,  e.g.  HSH 1234.  Her total wage income would go on the actual  line 1.  If the HSH was her only wage income, then enter 1234 (from the example) on line 1 also.  That is, the amount is shown twice.

 

 

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

Is it a paid form of Turbotax that I need to use to submit this other income? I selected free edition, but when i followed all steps as you described it prompted me to deluxe version. I don't understand why do i need to upgrade for such a simple tax return?

DianeW777
Expert Alumni

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

Due to the nature of the entry, other income will be an upgraded version to accomplish the required entries on the tax return.  For this reason you will be prompted to upgrade to Deluxe.

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Mike0810
Returning Member

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

@Hal_Al 

 

I have a question if you could please give me some help. I was reading one of your old posts and I am not 100% sure. I was wondering, if My mom takes care of my daughter in my house and she reports it as 1099 Misc can I still claim the Dependent Care Credit. Also am I suppose to give her a 1099 Misc form is it too late now if I don't have one? My moms earned income was $7,500 in 2020 at a fast food Job plus I payed her $2,200 to take care of my daughter in my house through out the whole year. In total her gross income is $9,700 Does she have to report the $2,200? If she doesn't have to report this income can I still claim the DCC? This is all she would be reporting in her taxes. Thanks in advance I would really appreciate your response!!

 

Edit: When I said 1099 Misc I meant Miscellaneous income. I am actually trying to avoid the whole FICA situation and self employment.

Hal_Al
Level 15

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

Q. If My mom takes care of my daughter in my house and she reports it as 1099 Misc* can I still claim the Dependent Care Credit.

A. Yes. You can claim the dependent care credit no matter how she reports the income, or if she doesn't report it. You have to provide her SS# to the IRS. Reporting the income is her issue, not yours.

 

Q. Also am I suppose to give her a 1099 Misc form?

A. No. She reports the income from her own records (you have the option of giving her a W-2, but "nobody" does).

 

Q. In total her gross income is $9,700 Does she have to report the $2,200? 

A. Yes. She doesn't need to fila a tax return, since her total income is less than $12,400.  But if she files to get a refund of withholding on her W-2, she must also include the $2200, even though it doesn't change anything.

 

Q.  If she doesn't have to report this income can I still claim the DCC? 

A.  Yes. 

 

* I'm not sure what you mean by "reports it as 1099 Misc".  She should not report this as self employment, unless she trying to build up Social security credits.  Self employment income requires her to pay both social security and Medicare (FICA) tax at a ~14% rate.  She should not report this as "other income" as it will not be treated as earned income.  As a grandparent, working in your home, she is exempt from FICA.  She reports it as Household Employee income. 

In TurboTax, enter at:

 Federal Taxes

Click on Wages and Income

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. On the net screen, enter your income as Household Employee Wages (ignore the $2100 limit, it doesn’t apply to grandparents) and continue the interview until it completes.

 

TurboTax puts the amount on line 1 (wages) of form 1040 with the notation “HSH”.  It is considered earned income.

 

 

 

 

 

 

bjshenjie
Returning Member

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

Hello,

I paid about $18000 for my parents to take care my kids in 2020. How do my mom claim these income and what level of turbotax software should she get? Do I need to claim these childcare fee? 

Thanks in advance!

bjshenjie
Returning Member

My child's grandmother is going to provide day care in my home. I know she needs pay statements, but do I also need to produce a W2 for her? Any withholdings?

hi, i paid $18000 for my parents to babysit my kids in 2020. I didn't issue her any W2 or 1099. I saw the post that she can still report her income as "other misc income". In this case, can she still pay medicare tax (she is trying to get medicare later)? Also do I need to report these expense through my tax? 

Thanks in advance

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