Is there action I need to take if I paid a babysitter/nanny over the threshold last year (2020)?

[matthewstansberr]

She worked in our home. I claimed the amount I paid and used her SSN. I didn't receive any prompts to submit a W2 or anything. She is asking me where her W2 is and I don't know what to do. Also, I already filed. Please help. Thank you.

[LenaH]

Yes. Per the IRS, you will need to file a W-2, W-3, and a Schedule H on your 1040 if you paid your nanny more than $2,200 for the year. 

The IRS encourages you to file the W-2 and W-3 electronically. If filing electronically via the SSA's Form W-2 Online service, the SSA will generate Form W-3 data from the electronic submission. You can file electronically with the SSA at the page Employer W-2 Filing Instructions & Information. 

Once your return is accepted, you will have to amend your return to file Schedule H as well. Please follow the directions on the How do I amend my 2020 return?

To file a Schedule H, Household Employment Taxes, with your return, please follow the instructions below: 

1. Open or continue your return in TurboTax.
2. Search for sch h with the magnifying glass tool at the top of the page. 
3. Select the Jump to link at the top of the search results.
4. Answer Yes to Did You Have a Nanny or Household Employee? and follow the instructions.

For IRS guidelines on the Schedule H, W-2, and W-3 for household employees, please see IRS Instructions for Schedule H (2020).

[macuser_22]

*You* do not file a W-2 in TurboTax, the nanny files the W-2 that you provide her with.  You file the schedule H (household employee) tax.

See IRS Pub 926 for details.

https://www.irs.gov/pub/irs-pdf/p926.pdf

[matthewstansberr]

Thank you for everyone's help so far @LenaH @macuser_22 . This is very confusing and uncharted territory for me. Am I on the right track? 

Before I can issue her a W2 (now very late), I need to register with the IRS to obtain an EIN, Amend my 2020 taxes (pending) tile a Schedule H, register with SSA to file the W2 and W3 documents? I asked her to fill out a W4 already. 

Sidenote: Why didn't TurboTax lead me through these prompts after claiming the amount for child care? 

Respectfully, 

Matt

[macuser_22]

The child care deduction and household employee reporting are totally separate things.    Most taxpayer do not have a household employee and you can have a household employee with no child at all.  

A W-4?  It it too late to withhold 2020 tax now - 2020 is over.

Tax withholding is not required unless you BOTH agree per the IRS Pub 926:

The household employer rules for federal income tax withholding have not changed. That is, you're not required to withhold federal income tax from wages you pay a household employee. You should withhold federal income tax only if your household employee asks you to withhold it and you agree. Employers will figure withholding based on the in-formation from the employee's most recently submitted Form W-4, Employee’s Withholding Certificate. Similarly, any employees hired prior to 2020 who wish to adjust their withholding must use the redesigned form. For the latest information about developments related to Form W-4,

[matthewstansberr]

Thank you for that explanation @macuser_22 . Things are beginning to look more clear. The only agreement we had was for her to watch my kids while my wife and I worked. There was no discussion of withholding tax. 

Tax season came, and I wanted to claim the amount I paid, naturally. I claimed the amount through Turbo Tax, used her SSN with her permission. She needs to file her taxes and asked me for a W2. How do I tell her to proceed? Is there anything I need to do? 

Thanks for your help. 

- Matt 

[macuser_22]

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@matthewstansberr wrote:

Thank you for that explanation @macuser_22 . Things are beginning to look more clear. The only agreement we had was for her to watch my kids while my wife and I worked. There was no discussion of withholding tax. 

Tax season came, and I wanted to claim the amount I paid, naturally. I claimed the amount through Turbo Tax, used her SSN with her permission. She needs to file her taxes and asked me for a W2. How do I tell her to proceed? Is there anything I need to do? 

Thanks for your help. 

- Matt 

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Read the Pub 926 that I posted the link to.  It explains the W-2 requirements.       A W-2 is only required if you paid more then $2,200 in 2020.

[matthewstansberr]

Okay, I read Pub 926 like you suggested. Here is where I am at. 

For CY 2020, I paid out more that $2,200 for babysitting that occurred in my home. Neither of us withheld anything, and there was no exchanges of W4's. I was unaware of any of this while filing my taxes. My taxes are filed, and accepted. I am now looking to amend my CY2020 taxes to now file a Schedule H correct? 

Now that we are in March of 2021, what should our further actions be now that no taxes where withheld and there was no expectation of withholding? 

[macuser_22]

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@matthewstansberr wrote:

Okay, I read Pub 926 like you suggested. Here is where I am at. 

For CY 2020, I paid out more that $2,200 for babysitting that occurred in my home. Neither of us withheld anything, and there was no exchanges of W4's. I was unaware of any of this while filing my taxes. My taxes are filed, and accepted. I am now looking to amend my CY2020 taxes to now file a Schedule H correct? 

Now that we are in March of 2021, what should our further actions be now that no taxes where withheld and there was no expectation of withholding? 

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Just file the Schedule H and provide the W-2 as specified in Pub 926 page 11.  (Note that the current 926 is the 2021 version so the dates given must be adjusted for 2020.)