The simple
answer is she files as a self employed person, since she is not getting a W-2. 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) on
any profits greater than $400.You report the income from your own records.
The real
answer depends on more detail, but she probably should be getting a W-2. But she can elect to file as self employed, instead.
Does she
baby sit in your home or the client's home?
Did she and the client discuss, ahead of times, how taxes would be
handled? Was she paid more than $2000 by any one client?
If she baby
sat in your home, she is a self employed child care provider. If she sat in the
client’s home, she is an employee and the client is her employer (not her
client); unless she and the client agree to treat her as self employed person. A
self employed person should expect to be paid (roughly) 8% more than an
employee to handle the extra taxes.
Here are a
couple of references on the subject:
https://www.care.com/homepay/whats-wrong-with-hiring-my-nanny-as-an-independent-contractor-121211043...
https://www.homeworksolutions.com/knowledge-center/my-nanny-wants-to-be-treated-as-an-independent-co...
