She is wrong, right??

[mom-from-missouri]

A gal I babysit for told me that since she was claiming only $3000 for childcare, I didn't need to claim it as income. Says her tax man told her that.

I feel I made less than $3000, I will have to add it up--haven't done that yet.

Also, since she has my social, I was under the impression that was to make sure her amount and my amounts matched.

Since when can I earn up to $3000 and not have to claim it as income? I know it is most likely on line somewhere, but my dial up is too slow today to search....

I think she is wrong, and I intend to claim it unless I find out otherwise.

[jIM_Ohio]

Not sure I understand the exact question and situation.

You watch this person's daughter. She is claiming she paid you $3000 to take a credit (I assume).

Focus on your situation, not hers- meaning if her tax man said to claim $3000 even though she paid you $12,000 or something more than $3000, does not matter.

You should be able to offset about $12,000 in income- based on standard deduction and 1 exemption for yourself (I would need to look these up to verify amounts for 2009).

[mom-from-missouri]

It appears I actually earned $2400 watching her child.

I feel I need to claim that $2400 as income on my part.

Yet, she said her tax man is putting down she paid $3000. She also said if it is $3000 or less I don't need to claim it at all.

So, she is telling the government I actually earned more than what I really earned (and that she paid more than I really paid) AND telling me not to claim it at all.

Something doesn't feel right here....

By the way, I also have rental income and my husband works full time. We have 3 little ones at home still. It is not as if that is the only money we earned in our household.

[jIM_Ohio]

It appears I actually earned $2400 watching her child.

I feel I need to claim that $2400 as income on my part.

Yet, she said her tax man is putting down she paid $3000. She also said if it is $3000 or less I don't need to claim it at all.

So, she is telling the government I actually earned more than what I really earned (and that she paid more than I really paid) AND telling me not to claim it at all.

Something doesn't feel right here....

By the way, I also have rental income and my husband works full time. We have 3 little ones at home still. It is not as if that is the only money we earned in our household.

First, ask her why she is claiming more than she paid you (probably to maximize a credit) and then second, you should only claim what you received ($2400).

You will have to pay taxes on the $2400, plus FICA and a few other taxes too. You should be able to claim things like utilities, mortgage interest and other household expenses as business related expenses to offset some or all of the taxes.

[mom-from-missouri]

Thanks Jim, that is exactly what we thought.
yes, she is trying to claim as much as she can

(meanwhile my pc is still searching on on the irs website...)

[Beppington]

It appears I actually earned $2400 watching her child.

I feel I need to claim that $2400 as income on my part.

Yet, she said her tax man is putting down she paid $3000. She also said if it is $3000 or less I don't need to claim it at all.

So, she is telling the government I actually earned more than what I really earned (and that she paid more than I really paid) AND telling me not to claim it at all.

Something doesn't feel right here....

By the way, I also have rental income and my husband works full time. We have 3 little ones at home still. It is not as if that is the only money we earned in our household.

While it might be irritating to know she's planning to lie to the IRS, I don't think it's your concern as long as you have documentation. All you can do is make sure your tax return is done accurately.

She's a non-CPA giving you tax advice, which you should ignore of course, even though it's supposedly coming from from a CPA, a CPA who has no responsibility/ obligation regarding the accuracy of your tax return. If it turns out to be wrong, and you owe the IRS some big cash penalty, are they going to pay it for you: No.

Her advice therefore is meaningless, so you should disregard it.

[jIM_Ohio]

Home based business

Tax Topics - Topic 509 Business Use of Home

Business use of home
Publication 587 (2009), Business Use of Your Home

Daycare
Instructions for Form 8829 (2009)

Schedule C self employment income

http://www.irs.gov/pub/irs-pdf/f1040sc.pdf

I would start with those and then keep looking

[wnlbutterfly]

I don't know who is doing her taxes but OMG!

You will need to file a Schedule C. There are a lot of deductions you can take as a babysitter, and usually those deductions cancel out any earnings. Sometimes you will even see a loss.

Claim the income that you have records for. If you get audited you want to be able to back up what you filed. Most likely IRS is not going to catch this error between the two, but you are responsible for filing your taxes properly.

You may also need to pay Self-Employment tax depending on how much you earned after expenses. So for a tax preparer to say you don't have to claim it is just outright WRONG. Of course you didn't hear it from the tax preparer.

I do taxes and generally what you do for babysitting is write out a receipt, with your social or EIN, name and address, then write right on there how much YOU received for babysitting. Make a copy for your files. Then if she claims more and it does cause an audit you have the backup!

[jIM_Ohio]

I don't know who is doing her taxes but OMG!

You will need to file a Schedule C. There are a lot of deductions you can take as a babysitter, and usually those deductions cancel out any earnings. Sometimes you will even see a loss.

Claim the income that you have records for. If you get audited you want to be able to back up what you filed. Most likely IRS is not going to catch this error between the two, but you are responsible for filing your taxes properly.

You may also need to pay Self-Employment tax depending on how much you earned after expenses. So for a tax preparer to say you don't have to claim it is just outright WRONG. Of course you didn't hear it from the tax preparer.

I do taxes and generally what you do for babysitting is write out a receipt, with your social or EIN, name and address, then write right on there how much YOU received for babysitting. Make a copy for your files. Then if she claims more and it does cause an audit you have the backup!

FYI
you will pay self employment tax on the income regardless of gain or loss- SS is paid to gov't before taxes are taken out and also paid regardless of deductions taken.

[MonkeyMama]

Oy vey!

Report the income as self-employment income. You only need to do Schedule C if you have deductions to offset the income. Only your NET (income minus deductions) is taxed.

You *do* need to report it. There is no "$3k rule."

To cover your butt, prepare this form, keep a copy for your records, and give a copy to the person you babysat for:

http://www.irs.gov/pub/irs-pdf/fw10.pdf

If she reports $3k and you get a notice from the IRS, you can show them this form and tell them you sent it to her. Then, they can deal with her. & sending the form to her, makes clear to her, what you are reporting.

Good Luck!

[disneysteve]

She's a non-CPA giving you tax advice, which you should ignore of course, even though it's supposedly coming from from a CPA

Just wanted to point out that OP didn't say anything about a CPA, just that this woman was getting advice from her "tax man." One does not need to be a CPA to do taxes. In fact, any Tom, Dick or Harriet can take a weekend seminar and start doing taxes. I know of at least one person who somehow started helping some seniors in her area to prepare their taxes and this person has ZERO training, none at all, zip, nada. I cringe every time I hear that someone is coming to her to have their taxes done.

[ktmarvels]

Too bad it's not still 2009, you could ask her for the extra $600 between what she's claiming and what you earned.

I agree with everyone else, you need to make sure the tax stuff on your end is correct, you never know what she will do.

[MonkeyMama]

Just wanted to point out that OP didn't say anything about a CPA, just that this woman was getting advice from her "tax man." One does not need to be a CPA to do taxes. In fact, any Tom, Dick or Harriet can take a weekend seminar and start doing taxes. I know of at least one person who somehow started helping some seniors in her area to prepare their taxes and this person has ZERO training, none at all, zip, nada. I cringe every time I hear that someone is coming to her to have their taxes done.

Agreed. On the flip side, being a CPA means you are an accountant. It doesn't mean that you know anything about taxes!

I know, it is confusing.

[Beppington]

Agreed. On the flip side, being a CPA means you are an accountant. It doesn't mean that you know anything about taxes!

I know, it is confusing.

Oh good grief, that never occurred to me ... Who the heck then is the most qualified person to prepare a tax return?

[MonkeyMama]

Oh good grief, that never occurred to me ... Who the heck then is the most qualified person to prepare a tax return?

In general, an enrolled agent. OR a CPA that does specilaize in taxes.