She babysits my son in her home and I paid less than $3,000. It is treated as more of a grandparent-type relationship (i.e. flexible hours, sometimes overnight, and weekends). Would it be better for me claim it as a gift rather than child care? If I claim it as childcare does she claim it as 'other income' on her joint return with my dad or self-employment income?
You'll need to sign in or create an account to connect with an expert.
The money you paid her depends on the intention behind it. If it were not your relative, payments for child care generally be considered self-employment income. However, if out of the kindness of her heart she sat with them, and out of the generosity of yours, you gave her a gift, then that is what it is.
If it is a gift, you can't claim the credit.
What if the payment to grandparent is over $3000 say $5000?
Q. What if the payment to grandparent is over $3000 say $5000?
A. The answer(s) are the same, up to $15,000 when gift tax might be triggered.
What happens if the grandparent was paid $5K from an FSA? Would that be treated as a gift on the grandparent's taxes or would that be considered misc. income / hobby income since she is not doing it to make a profit?
A gift is not reported on anyone's tax return. You did not give her a 'gift' if you paid her with your FSA funds.
If you report her name and SSN as your child care provider, she should report the income on her tax return.
She can report it as 'Miscellaneous Income' (not her regular job, not to make a profit) and it won't be taxed as 'self employment income' but it will still be considered taxable income. If she reports it as 'hobby income' it's still taxable income also.
However, if her total income is below Filing Requirements, she is not required to file a return to report it.
Ok thanks. I will report it as hobby income or misc. income.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
mlobsien3436
New Member
munger
Level 2
tiomilty
New Member
joyceew1959
New Member
Quetta74
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.