Question about Child-Care
Hi, quick question. All of last year my sister-in-law watched my daughter while I worked. I paid a little over $3,000 over the year to her. I can claim this on my tax return correct? I just need her social security number and address. Am I right? Thanks.
First you have to report her income - a 1099 if it was at her place, a W-2 if she was at yours, and if it was at yours, you also need to file Schedule H with your return & pay her Social Security tax.
W-2s & 1099s were due yesterday.
If she doesn't belt you, you may be eligible for a credit.
Re: Question about Child-CareYou have*1 to report it to the IRS*2 and the appropriate state taxing agency.
*1 It's not clear to me that you actually have to report it if she's an independent contractor, as it's not part of your business. Contrary to the previous posts, odds are against her being considered an independent contractor, even if she babysits in her own home. However, even if you don't report the earnings to the IRS, she still has to report it as income on her return. Your claim would give the IRS sufficient information to check her return for the earnings.
*2 See below on exactly who you report to.
In California, the deadline for the initial report would have been one month after the first calendar quarter in which you paid $750 if she is considered your employer, and 30 (or perhaps 20) days after you first paid or expected to pay $600 for the year if she is considered an independent contractor.
The deadline for giving her a copy of the W-2 (if she's considered an employee) or 1099 (if she's considered an independent contractor) was January 31, and the deadline for filing the W-2 (with the Social Security Administration) or 1099 (with the IRS) was February 28 (or April 1, if you can file electronically). If you file a W-2, you have to file a 1040 Schedule H, along with additional payment, with your tax return.
The federal filing requirements are:
If an employee, you must file if you paid her at least $1400 during the year or at least $1000 in some calendar quarter.
If an independent contractor, you must file (but see note 1 above) if you paid her at least $600 during the year.
Re: Question about Child-Care
Your answer was much better. I shouldn't touch this forum after 8pm - too much temptation to just skip past the always tricky employee status determination & go straight to the joke.
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