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
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.
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 $16,000.
Thank you for your reply.
In this case I will NOT claim nanny tax and I will NOT claim them as my dependents. They will file tax to IRS by themselves to report this income to IRS. I can down load 1099-misc from IRS to fill it and mail one back to IRS , one back to state ,and leave one copy for my parents.
In this way I will done all I should do. Is that correct?
How are the parents gonna file their own tax if they don’t have W2? Is the 1099 misc the same as W2? Can parents use 1099 misc to file as their income for their own tax?
@eleven13 You have added to someone else's thread, and we do not have a clear idea of your situation or the questions you are trying to ask. However, a "household employee" gets a W-2---not a 1099. So please explain your situation to us clearly. Are your parents working for you in YOUR home? Are they taking care of your children---or are they doing something else? How much has been paid to each parent in 2022? Do they live with you? Do you claim them as dependents?
Thank you! Sorry I think the OPs situation very similar to mine so I just jumped in. So my mom is living with us. I hired her to help taking care of the baby then also take care of the house and cooking while we at work. I have been paying her at a rate of 1200$ 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!
@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 $12,950 for 2022. Tax year 2023 may be different.
Some further thoughts on this would help--@Critter-3 @Hal_Al
Thank you! Then I won’t claim her as an dependent. If I consider her as household employee, then I will issue her a W2 or 1099 Misc? Can she still pay for the Medicare and SS tax cos she wants to accumulate for the tax credit~ thank you! Her income will be over 12950$.
@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
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-taking-care-of-kids-tax-implications-paperwork/00/2366537
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.
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
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?
She doesn't need to pay social security or Medicare tax. You can enter her income in TurboTax as follows:
It will show on line one for Form 1040 as wage income.
Came across this thread when I was looking for tax answers and I have a similar situation.
My mom is helping take care of our baby for
a month and I’m paying her for that using my dependent care fsa. My understanding was I would need to register a FEIN and a California state tax ID to report taxes and then issue her a W2 as well, but from previous discussions on this thread it looks like I could just pay her cash/check and she reports and pays taxes for this income.
Are there any tax forms I would need to fill for this payment?
Q. My understanding was I would need to register a FEIN and a California state tax ID to report taxes and then issue her a W2 as well?
A. No. That is not required, unless you intend to withhold taxes from her pay (that is not required).
Q. it looks like I could just pay her cash/check and she reports and pays taxes for this income.
A. Yes, that is allowed. How she goes about reporting it depends on whether she sits in her home or yours. If she works in your home, she is a household employee. How to enter is described above.
Q. Are there any tax forms I would need to fill for this payment?
A. No.
Hi
Regarding below Q&A
Q. it looks like I could just pay her cash/check and she reports and pays taxes for this income.
A. Yes, that is allowed. How she goes about reporting it depends on whether she sits in her home or yours. If she works in your home, she is a household employee. How to enter is described above.
My situation is my mom lives with me, taking care of my daughter. how does she reports and pay taxes for her income. I live in Texas.
Couple of other questions as I still have confusion.
1. I need to generate W2 for her as household employee ..staying with me and she would need to use w2 for her tax file for HealthCare Marketplace Eligibility. In that case do I need EIN to generate W2 for her?
2. I understood I do not have to worry about medicare and ss tax amount as a household employer [nanny tax] . Am I correct ?
2.Can I include the payment I made to my mom in form 2441 as Child and Dependent Care Expenses?
Thanks in Advance
Q1. I need to generate W2 for her as household employee ..staying with me and she would need to use w2 for her tax file for HealthCare Marketplace Eligibility. In that case do I need EIN to generate W2 for her?
A1. I'm not knowledgeable about HealthCare Marketplace Eligibility. You may have to post a separate question for that.
As to reporting, the household employee income, she does not need a W-2. See below on how to report.*
Q2. I understood I do not have to worry about medicare and ss tax amount as a household employer [nanny tax] . Am I correct ?
A2. Yes. Grandparents are exempt. See exception on page 6 at https://www.irs.gov/pub/irs-pdf/p926.pdf
Q3. Can I include the payment I made to my mom in form 2441 as Child and Dependent Care Expenses?
A3. Yes
*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 $2700 limit, it doesn’t apply to grandparents) and continue the interview until it completes.
The income goes on line 1b of form 1040 ("Household employee wages not reported on Form(s) W-2").
Hi there, I didn’t realize I can ignore the $2700 limit, so I put my wage in 1h “other earned income” and filed it already. I have the same situation. A grandma as a household employee for my daughter. Is this an issue now? Do I need to file a correction? Thanks
Q. I put my wage in 1h “other earned income” and filed it already. Is this an issue now?
A. Probably not. Line 1h is less usual, but it gets taxed the same.