When I hire my parents as my household employee , do I need to issue their 1099 form when they file their tax? I do not have business, so I do not know how to issue them?

[danilol]

When I hire my parents as my household employee , do I need to issue their 1099 form when they file their tax? I do not have business, so I do not know how to issue 1099 form.  Do they need any tax from from me to file their tax? Do I need to do something when I file my tax?

Thanks

[DianeW777]

No, they do not need any tax form. A parent is an exception to the household employee tax requirement (so called "nanny tax"). But the income IS taxable to your parent(s), particularly if you plan to claim the child and dependent care credit.  You must use their SSNs and address, they will file self employment income on Schedule C.

Wages not counted.  (IRS Publication 926)

Don't count wages you pay to any of the following individuals as social security or Medicare wages, even if these wages are $2,400 or more during the year.

1. Your spouse.
2. Your child who is under the age of 21.
3. Your parent. Exception: Count these wages if both the following conditions apply.
   • a. Your parent cares for your child (including an adopted child or stepchild) who is either of the following.
     • i. Under the age of 18. ii. Has a physical or mental condition that requires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed.
   • b. Your marital status is one of the following.
     • i. You’re divorced and haven't remarried.
     • ii. You’re a widow or widower.
     • iii. You’re living with a spouse whose physical or mental condition prevents him or her from caring for your child for at least 4 continuous weeks in the calendar quarter services were performed.
4. An employee who is under the age of 18 at any time during the year. Exception: Count these wages if providing household services is the employee's principal occupation. If the employee is a student, providing household services isn't considered to be his or her principal occupation.

Child and dependent care expenses have changed for 2021. You are now able to get a credit for up to 50% of eligible expenses. The amount of eligible expenses has increased from $3,000 for one qualifying person to $8,000. Additionally, for those with two or more qualifying persons, the amount of eligible expenses has increased from $6,000 to $16,000.

• IRS Instructions Form 2441
• Form 2441
• How do I get the Child and Dependent Care in TurboTax?
• Where do I enter Schedule C?

[danilol]

Thank you for your reply.

In this case I will NOT claim nanny tax and I will NOT claim them as my dependents. They will file tax to IRS by themselves to report this income to IRS. I can down load 1099-misc from IRS to fill it and mail one back to IRS , one back to state ,and leave one copy for my parents. 

In this way I will done all I should do. Is that correct?

[AliciaP1]

Yes, you have outlined your next steps correctly.

@danilol

[danilol]

Thank you very much.

[eleven13]

How are the parents gonna file their own tax if they don’t have W2? Is the 1099 misc the same as W2? Can parents use 1099 misc to file as their income for their own tax?

[xmasbaby0]

@eleven13 You have added to someone else's thread, and we do not have a clear idea of your situation or the questions you are trying to ask.  However, a "household employee" gets a W-2---not a 1099.   So please explain your situation to us clearly.   Are your parents working for you in YOUR home?  Are they taking care of your children---or are they doing something else?   How much has been paid to each parent in 2022?  Do they live with you?  Do you claim them as dependents?

[eleven13]

Thank you! Sorry I think the OPs situation very similar to mine so I just jumped in. So my mom is living with us. I hired her to help taking care of the baby then also take care of the house and cooking while we at work. I have been paying her at a rate of 1200$ each month by check or cash. My mom just got her SSN around March of 2022 and that’s when I started to hire her. I never claim her as dependent but I’m considering to this year unless it’s not allowed as I’m currently hiring her?

My question is, I know she’s Recieving income so she needs to file her tax and pay the medical and SS tax, but can I generate a W2 for her or what tax form she will need to use to file her tax? If I claim her as dependent, can she still file her tax or I will need to file for her under my tax filing? Thank you!

[xmasbaby0]

@eleven13 You cannot claim the childcare credit for a childcare provider who you also claim as a dependent on your tax return.   And....if you have paid your mom more than $4400 in 2022 she earned too much to be claimed as anyone's dependent.    She is performing work in your household and could be considered to be a household employee.   The amount you say you have paid her does not quite reach the threshold for her to have a filing requirement for 2022 if it is below $12,950 for 2022.   Tax year 2023 may be different.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/taxation/considered-household-employee/L...

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-payments/pay-taxes-pay-household-emp...

Some further thoughts on this would help--@Critter-3   @Hal_Al 

[eleven13]

Thank you! Then I won’t claim her as an dependent. If I consider her as household employee, then I will issue her a W2 or 1099 Misc? Can she still pay for the Medicare and SS tax cos she wants to accumulate for the tax credit~ thank you! Her income will be over 12950$. 

[xmasbaby0]

@eleven13 Couple of things.....your mom is taking care of your child and -- per your comments--- cooking and cleaning your home.   If you are going to claim the childcare credit you need to break down how much of her pay is for the childcare.  You do not get childcare credit for cooking and cleaning---only the childcare.   If she is a household employee you issue a W-2----not a 1099NEC.   And.....there are some details regarding SS and Medicare which I hope can be better explained to you by another Champ @Hal_Al 

[Hal_Al]

Q. Can she still pay for the Medicare and SS tax; she wants to accumulate for the tax credit?

A. No. 

For an explanation, see @TomD8 's reply at https://ttlc.intuit.com/community/tax-credits-deductions/discussion/paying-grandparents-regulary-for...

[SSBB]

I have a related question and need some clarity. Appreciate your response.

When you say "No, they do not need any tax form",  Am I right to say that as a household employer employing mom for cooking, there is no need to issue any tax form to mom or to IRS?

Is there a need to apply for EIN for employing a mom as a household employee? Since the rule says not to count the wages you pay parents and there is no need to pay SSN or medicare tax.

[Hal_Al]

Q. Am I right to say that as a household employer employing mom for cooking, there is no need to issue any tax form to mom or to IRS?

A. Yes

Q. Is there a need to apply for EIN for employing a mom as a household employee?

A. No

Q. Since the rule says not to count the wages you pay parents and there is no need to pay SSN or medicare tax?

A. Yes

[SSBB]

Thanks for the prompt response.

Under which income category does mom need to show the payments received when she file her tax returns?

Is she responsible for paying any SSN and Medicare taxes for the income received?