Originally Posted by Jpost
If I got paid for babysitting all year long do I claim it as taxable income or do I have to claim it as business income
I guess it at all depends entirely on where the care takes place and who provides it.; unless you work for an employer and receive an W2 by jan 31 next year and if your babysitting earns you $400 or more, you're self-employed. Then, you need to file Sch C / SE with your tax return. However, it's entirely possible that you could end up erasing your earnings by completing Sch C. This form reports what you earned, but it also allows you to take deductions from that income for business expenses. For example, if you advertised your services at some point during the year or had business cards printed, these costs are deductible. Likewise, if you purchased toys or games to amuse the children in your care, or if used your home to provide child care, you can take deductions for these things. Depending on your income, the deductions might exceed what you earned, resulting in negative income. You'd still have to file Sch C, but it would show a business loss. Unless you are a student under the age of 18 or a self employer as mentioned above, you may be required to be hired as an employee and your employer withholds taxes from your paychecks. Babysitter as Employee
If the person you babysit for has the right to control what you do, when you do it and how you do it, you might consider that person to be your employer. If you work as an employee, the person you work for should provide you with a W-2 detailing how much you were paid during the year, as well as how much money was withheld for such things as fica taxes, or etc You should report your babysitting earnings on W-2 earnings on Line 7 of Form 1040
Then, your employer must have you fill out an I-9 form that certifies your work status, as well as a W-4 form so your emoployer 'll know how much tax to withhold from your paychecks. Your employer may make regular estimated tax payments of your tax liabilities, increase withholding tax at work, or risk being assessed an underpayment penalty when your employer files Sch H with his 1040 tax return the following spring. Sch H is the annual return for household employers. Your employer will also be required to provide W-2 forms to you and federal government, as well as paying the employer's matching FICA tax, federal unemployment tax and possibly state unemployment tax.