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Tax requirements for babysitter/nanny?

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Allisonfaye

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We had a part time sitter last year for about half the year and we are not sure how to treat it on our taxes. I go on the IRS site and it is about as clear as mud. Does anyone know what we are required to do? She made around $6k.
 

Girlrocks

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In my state, you can only take the deduction if the provider is a licensed provider, and you need her license number on your taxes.
 

nejarb

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i don''t think you need to do anything. there''s no deduction for you to take on this expense, b/c although the babysitter is an employee, she''s not working for you in a business sense. she''s expected to pay taxes on the money she made, but i don''t think there''s any type of corrosponding form for you to file to show how much you paid her. i suspect that in alot of cases w/ domestic employees, the employee doesn''t ever include this in her income tax return.

but what is this deduction? and why would it be state-specific? maybe some states have a deduction or credit or something like that for child care (and i think fed gov does too) but i''m sure there''s an income threshold.
 

Allisonfaye

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Just to clarify, I am not necessarily talking about getting a deduction. I just want to do it correctly. How do I report it?
 

the other Jake

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Your babysitter is probably considered an independant contractor rather than employee. If he/she were an employee then you would be required to pay/withhold employment taxes and such. Independant contractors are considered self employed and as such required to report/pay these taxes themselves. The determination of whether someone is an employee or independant contractor is somewhat subjective but mostly relies on the responsibility they have involved their work. It is my understanding you don't have any obligation to report anything. If for some reason you were to get audited (highly unlikely) you would be justified in stating that they were an independant contractor rather than an employee.

If both you and your husband are employed you may be eligible for a deduction. In which case you would need for your child care provider to give you their name or business name if there is one, an address, and a Social Security or Employer Identification Number. This information will be reported on your 2441 form so that you can claim the Child and Dependent Care Tax Credit.

Here is an article with some more info. Scroll down at look at "the child care credit" section. I would discuss your options with a qualified CPA. I'm an audit guy
and not a CPA ... yet
 

diamondseeker2006

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And I would just add that this is something you''d discuss prior to hiring the person. My after-school care person charges enough to cover her taxes, and then she gives us a tax receipt at the end of the year.
 

Allisonfaye

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Date: 2/19/2007 2:07:05 PM
Author: the other Jake
Your babysitter is probably considered an independant contractor rather than employee. If he/she were an employee then you would be required to pay/withhold employment taxes and such. Independant contractors are considered self employed and as such required to report/pay these taxes themselves. The determination of whether someone is an employee or independant contractor is somewhat subjective but mostly relies on the responsibility they have involved their work. It is my understanding you don''t have any obligation to report anything. If for some reason you were to get audited (highly unlikely) you would be justified in stating that they were an independant contractor rather than an employee.

If both you and your husband are employed you may be eligible for a deduction. In which case you would need for your child care provider to give you their name or business name if there is one, an address, and a Social Security or Employer Identification Number. This information will be reported on your 2441 form so that you can claim the Child and Dependent Care Tax Credit.

Here is an article with some more info. Scroll down at look at ''the child care credit'' section. I would discuss your options with a qualified CPA. I''m an audit guy
and not a CPA ... yet
Nope. Not unless she makes UNDER $1,500 per year. I am supposed to get an Employer Identification Number, pay social security and medicaid and make sure she is eligible to work in the U. S. and withhold taxes from her pay. No wonder nobody does this. It is a royal pain in the butt. (Also, it doesn''t make any difference what state you live in).
 
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