If you're babysitting children, the Internal Revenue Service requires you to declare the money you earn as income. Whether you're a teenager earning spending money or an adult running her own babysitting service, the money you bring in belongs on your tax return. All the rules of self-employment apply, along with the thresholds for filing a tax return and any deductible expenses you may be paying. Show Advertisement Minimum Filing RequirementsAccording to IRS rules, you must declare any income earned from miscellaneous services, including an informal or occasional babysitting arrangement. There is no minimum age; tax rules on declaring income apply to minors as well as adults. The IRS does not require you to file a return, however, if your only source of income was self-employment and the amount you earned was less than $400. There's also some good news if you are still a single, dependent child. If someone else claims you as a dependent for tax purposes, you only need to file a tax return if you earn more than $6,200 in babysitting and other income combined, for tax year 2015. The IRS updates this threshold every year. Advertisement Video of the Day Declaring Income on Schedule CDeclare babysitting income on Schedule C, the form that the self-employed use to itemize their earnings and expenses. The total amount goes on Part I, Line 1. If you had any expenses associated with the service, you claim those deductions in Part II. For example, if you had to pay bus fare to get to a home for babysitting, you have a transportation expense associated with your self-employment. That cost goes on Line 24, and is subtracted from your income amount to arrive at net income on Line 31. Advertisement Declaring Income on Form 1040If you're showing net income on Schedule C, Line 31, it carries over to Line 12 on your Form 1040. This amount is included with any income you may have earned from a job, from unemployment compensation, from interest on a bank account, or other sources. The total income then appears on Line 22 before you make any adjustments, or claim any exemptions or tax credits. You also will have to fill out Schedule SE to figure any self-employment tax you may owe; this tax represents payments to Social Security and Medicare. Advertisement Advertisement Babysitting EmployeesIf you're babysitting as an employee and your boss issues a W-2 to declare your wages, different rules apply to your tax situation. If you're single, not claimed as a dependent and under 65, for example, the IRS only requires a return if your total wages from all sources exceeded $10,150, as of tax year 2014. This income is declared on Line 7 of your 1040. You would declare expenses as miscellaneous employee expenses on Schedule A, if you're itemizing deductions, and would not owe any self-employment tax on the income. As a responsible parent, you want to teach your kids the value of honest work. You might even pay your children an allowance for performing household chores, such as babysitting younger siblings. If your child earns money babysitting for other people, even relatives, the Internal Revenue Service considers that taxable earned income. How she files her income tax return depends on whether she was paid as an employee or a self-employed independent contractor. EmployeeBabysitters who work every now and then probably don't qualify as employees in the eyes of the IRS. Babysitters who do may fall under the so-called "nanny-tax" rule that applies to people who pay a household employee $1,800 or more. In that case, the employer has to withhold income taxes, social security and Medicare from her paycheck, and give her a Form W-2 at the end of the year showing her income and withholdings. The sitter will need to file a return if she wants to get an income tax refund. 1040EZIf the only income the sitter has comes from that job, and she's paid more than the $1,800 limit, she could file her tax return using Form 1040EZ. This is the easiest tax form to file. She just reports her earnings and the amount withheld. If she earned less than $5,800, she shouldn't owe any federal income taxes. She should get a full refund of any income taxes that were withheld from her paycheck, but she won't get a refund for the social security and Medicare portion. Self-EmployedIf the babysitting client didn't withhold taxes, the babysitter is considered a self-employed independent contractor. If a client paid her $600 or more, he owes her a Form 1099-MISC. However, she has to report all of her babysitting income whether she got that form or not. She can report her self-employed income on Schedule C or Schedule C-EZ, but Schedule C-EZ is simpler. Enter the total income on Line 1b and any business expenses on Line 2. Subtract Line 2 from Line 1b and enter that amount on Line 3 of Schedule C-EZ and on Line 12 of Form 1040. Self-Employment TaxNot every self-employed sitter is going to get more than $600, and as such not every sitter will owe taxes. To find out, multiply the amount on Line 3 of Schedule C-EZ by .9235. If the result is less than $400, the IRS isn't expecting to hear from that sitter. If the result is $400 or more, the sitter needs to fill out Schedule SE to figure how much tax he owes. More ArticlesWhat to Do If the Wrong Wage Is Reported on Your W-2?→ Declare the Money Earned From Side Work→ Obtain a Copy of a W2 Form→ References
Writer Bio Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps. |
How to file taxes as a babysitter
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