Your Life

Your Life

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.

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Pioneer
Posts: 1
Registered: ‎08-01-2017

Babysitting 1099 or W2?

I am a stay at home mom who also babysits my younger brother while my parents work. They pay me $1,200 per month and I need to know if I am self employed or require a W2?
Moderator
Posts: 196
Registered: ‎11-10-2016

Re: Babysitting 1099 or W2?

anjadams,

 

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.

  • She will not be considered an employee of her parent.
  • Her wages will not be subject to social security and Medicare taxes (FICA).
  • As such, she should not be issued a Form W-2.
  • The income will not be subject to SE tax as this fall under the caregiver exception to SE tax.
  • She will report the wages on line 21 of Form 1040 as “other income”.
  • The parents do not need to issue a Form 1099-MISC.
  • The parents do not need to file Schedule H.

 

IF she is 21 or over.

  • She will be considered an employee of her parent.
  • Her wages will be subject to social security and Medicare taxes (FICA).
  • She should be issued a Form W-2 (even though she is an employee).
  • She will report the wages on line 7 of Form 1040 as wages.
  • The parents need to file a Schedule H.

I hope this is helpful.

Harold

Tax Pro
Posts: 5,777
Registered: ‎02-23-2016

Re: Babysitting 1099 or W2?

[ Edited ]

Hi anjadams,

 

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.

 

Louis,

Senior Tax Advisor (Tampa, FL)