Babysitting is often the first job many young people have. Taking care of siblings or neighborhood children for extra pocket money is somewhat of a rite of passage. But, did you know that babysitters – even those paid in cash – may be required to file income taxes on their babysitting earnings? As far as the IRS is concerned, income is income, and it does not have to be paid to you in the form of a paycheck from a business. In order to find out if you need to file income taxes on babysitting income, you must first determine your employment status, and whether or not you have reached IRS income thresholds for the year.
Paying Taxes on Babysitting Income with a 1099 or W-2
If you’re a self-employed babysitter, the payer may not give you a 1099 because the services you provide are personal in nature, so he is not required to do so. Rather, 1099s are generally supplied by a person paying an independent contractor in the course of providing services for his business, and not for personal services received. But, just because you do not receive a 1099 from a payer, doesn’t mean you are off the hook for paying taxes on babysitting income.
If you’re self-employed, you are responsible for reporting this income yourself and paying self-employed babysitter taxes. Any self-employed income you receive from babysitting – in excess of a net $400 per tax year – must be reported at tax time on Form 1040, Schedule C or Schedule C-EZ. While you aren’t obligated to file a return with the IRS if you net less than $400 in a given tax year, it is still a good idea to do so. You may be eligible for a refund.
However, if you work in the capacity of a household employee and you earn more than $2,000 in any given tax year, then your employer is responsible for withholding income taxes, Social Security and Medicare from your paycheck. He is also responsible for supplying you with a W-2. You then take the information from your W-2 and report this income on Form 1040 or Form 1040EZ. Form 1040EZ is a simpler, easier version of Form 1040 that allows you to file your taxes with less hassle when paying taxes on babysitting income.
Are Babysitters Self-employed or Household Employees?
A babysitter can be either a self-employed contractor or a household employee depending on the scope of her duties. Determining employment status, in this instance, hinges upon a couple different things. First, the distinction between a household employee and an independent contractor comes down to how she performs her job. Do you have autonomy to perform your babysitting tasks? Then you’re probably considered self-employed. If the people for whom you’re babysitting decide how and when you perform your job, you’re more than likely a household employee.
For example, on occasion, you watch your neighbor’s child while she works a second job. If she leaves her child with you but doesn’t give you too many instructions, then you are largely responsible (within reason) for how you take care of the child. This is considered self-employment. On the other hand, if you receive detailed instructions such as when to pick up the child from soccer practice, when and what he must be fed, how long he should practice the piano or when he has to be in bed, then you would be considered a household employee.
Another difference between self-employed or household employees lies in how this income is reported to the IRS by the payer. Household employees receive a W-2 from their employer to report these earnings, while self-employed babysitters might receive a 1099.
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