Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.
08-03-2017 10:48 AM
Welcome to the Community. Your situation is a common one. I asked a member of The Tax Institute, our expert resource, to review your post and here is their feedback:
In no situation would this income be subject to SE tax. This is because a relative or family member who provides domestic service (e.g., nannies and babysitters) in or about a person's home is a household employee unless the relationship between the homeowner and the relative or family member falls within an exception. Only one exception applies to sons and daughters performing theses services and that depends upon their age.
If she is under the age of 21.
IF she is 21 or over.
I hope this is helpful.
08-03-2017 12:36 PM - edited 08-03-2017 12:37 PM
Welcome to the H&R Block community.
So as I mentioned previously, babysitters (that's you) are household employees. As a household employee you should be issued a Form W-2 and your parents will withhold and pay self-employment tax on what they pay you if you earn $2,000 or more for the year. Your parents should complete Schedule H with their tax return to report what they paid you and pay employment taxes as necessary.
What I left out before is the age exception for family members. If you're a household employee of your parents (you are) and if you are under age 21 then as mentioned in the previous post you do not have to pay the FICA taxes.
You can find all of this information and more in IRS Publication 926.
If you have any other questions I'll be glad to help.
Senior Tax Advisor (Tampa, FL)