15 yr old babysitter

[JenMO]

TP has cafeteria plan to pay child care expenses. Cafeteria plan wants name, address, and SS# of babysitter. Do they send that information to IRS? If babysitter's info is put on 2441 does IRS check to see if babysitter reported? Can a summer sitter not be SE, but just misc income? She is still a student and does not make a living doing this and it's not regular work? Any ideas?

[Bucky]

I think if she is doing it in the taxpayers home (baby sitting that is) then she is an household employee and s.s. taxes should be withheld and paid. I do not think the company turns any id info into the IRS concerning child care. They probably just want to make sure it isn't a family member.

[OldJack]

This is covered clearly in TheTaxBook page 5-18 & 5-19.

[JenMO]

I don't have the Tax Book, I bought Quick finders this year.

[Bill Tubbs]

Dependent Care Benefits

TP has cafeteria plan to pay child care expenses. Cafeteria plan wants name, address, and SS# of babysitter. Do they send that information to IRS? If babysitter's info is put on 2441 does IRS check to see if babysitter reported? Can a summer sitter not be SE, but just misc income? She is still a student and does not make a living doing this and it's not regular work? Any ideas?

This would be Dependent Care Benefits, and any amount paid out for this would be listed in Box 10 of the W-2. If the taxpayer does not fill out Form 2441, the amount in Box 10 gets added back to income on Form 1040, Line 7. To keep this amount from being added back to income, Form 2441 would need to be filled in, reporting the name, address, and SS# of babysitter.

I concur with the thought considering Household Employee.

Bill

[erchess]

Two Relevant Questions

One: From 1972 to 1977, ie seventh through twelfth grades, I did babysitting for sums as high as a dollar and a half an hour. I might have worked as many as twenty hours in a year and as many as six hours for one family. I was a dependent. I worked for multiple families, but I am sure I never worked enough to trigger SE Tax. Some of those years I had "real jobs" yielding income that was reported. No one I knew reported their babysitting income. It was not a common practice to "take out taxes" on household help that sometimes worked for a family full time throughout the year and it just never occurred to me that anyone would do so on my babysitting income. Under the rules that existed at that time, was I supposed to report my babysitting income?

(Things have changed of course for adult household workers especially if the employer works in the public sector.)

Second: Does anyone at all really file employee paperwork on a teenager who babysits for them? I know what the rulebook says but what I want to know is whether anyone actually follows it with teenage babysitters. It just seems to me that the sums of money involved are too small to bother with.

[OldJack]

I don't have the Tax Book, I bought Quick finders this year.

Then go to 1040 QF page 12-15 bottom right "Household Employment Taxes". Bottom line.. a less than 18 year old student is not treated like a household employee with employment taxes due but the under 18 student has to pay income tax as misc income unless doing it for others which would make it a business subject to SE tax.

[erchess]

Related Issue

I always ask clients who make more than 30K a year if they have a housekeeper, gardener, or if they have children, whether they have a Nanny. If they admit to employing any of these sorts of people I press them to go by the book . (I obviously understand that if the yard care provider works with his own tools pretty much on his own schedule we are probably ok calling him a contractor, especially if he has other clients for whom he provides similar services.) Ultimately, if they won't go by the book, I send them away.

On the other hand, if the clients are relatively low income, I ignore the fact that they may be paying someone under the table to provide child care in the provider's home. I have had such clients express surprise that the provider would not give a statement of what she had been paid and/or would not provide her ssn. I have explained to these clients that they can claim the child care credit, but only on a paper return, and that their child care costs will increase to the level of what a normal Day Care Center or After School / Day Camp charges and that they will get only a small amount of this money back at tax time. I do point out to them that they are technically violating the law but that in my opinion on one is seriously trying to enforce that law on them.

My reason is that the former sort of client is guilty of not paying a tax that is due, and therefore I am at risk if I knowingly go along. (Of course if they lie to me and truly have no way of knowing that they are lying my hands are clean.) On the other hand the latter sort of client is for tax purposes only guilty of not claiming a credit, which isn't illegal.