Claiming Babysitting on Your Taxes?

You need an accountant. If you don't want to deal with an accountant at the least you need quickbooks or a similar program.

The IRS is not going to just let you claim it, you are going to have to pay payroll taxes or self employed withholding. I can't remember the rate off the top of my head because you get part of it back for being self employed. It is a bigger deal that I think you imagine. Not an area I practice so I am just trying to remember classes from a couple years ago.

Just get an accountant!

If you claim it on your taxes, then those you are sitting for will need to claim it on theirs'.

My sitter usually gives us a paper, that includes her SSN, at the end of the year stating that she has received $xxx.xx from M. during 2011.

The best way to go about doing this right would be to hire the services of a qualified tax accountant. If you are producing an income you will be responsible for taxes on that income. You will need to distribute the taxes to the IRS on a quarterly basis on a form 941. When you file your tax return you will be filling out a Schedule C to claim your income and any expenses against that income. (This is where you will need a tax professional who can direct you as to how much and what type of expenditures are permitted by the IRS as it relates to an in home daycare.) You will also need to discover if there are any local limitations to daycare that may impact you such as the number of kids you can care for, and where you can care for your kids in your home. In NJ the daycare facility must have two ways of exit, meaning some basements wouldn't be eligible space for caring for kids since some basements only have one means of exit.

Do your research. While this may bring in viable income it will also come with the tax liabilty too. Take all of these things into consideration with the use of a trained and certified professional. You always want to have a team of experts on your side.

You will also want to get your CPR certificate too along with some early childhood education credits under your belt too. It will help you to better understand the business you are in and how to deal with the kids in your care a little better especially if there is an emergency.

If you are going to operate a business, you will need many things...

1. a Tax ID number
2. a business license
3. a county license to operate a business from your home
4. a day care license

I would start with an accountant and have them help you get your situation together starting with the TAX ID number and the business license...check with your insurance policy to ensure you are insured for this....if sounds like you are renting and not currently owning so you need to verify with your landlord that you are able to operate a business out of your home.

Then if you are going to run a day care...make sure you are signed up for the programs that the government offers for food for your children....

Make sure you have a contract set up with specific times for business...don't just shake hands and say "sure" if you are going to be serious about this - you will have to ensure that the clients know their child must be picked up by 6PM or charges will incur. There are several moms on here that operate a day care business...PM them and see what they say.

To keep the money straight - open a business account and start using Quicken or Quick books to help you run your business funds right!!

GOOD LUCK!!!

You will want to make sure and put aside some of the money for taxes. Cause if you claim it you have to pay taxes on it. You also need to check out the laws in your area. Make sure what is and is not allowed for an inhome child care. Some states may require you to be cretified by the state to claim it and in that case you would have to do other stuff along with it.

Good Luck and God Bless

You should open up a separate bank account to deposit the babysitting proceeds into. Keep track of what each parent pays you so that at the end of the year you can issue them a statement with your tax ID so they can claim the expense on their taxes and you can claim the income. You will also need to pay your estimated taxes on a quarterly basis (state and federal and make social security contributions). You are self-employed and need to operate as a business. Also, you should buy whatever food or other items you are going to use in the daycare business separately and keep the receipts as those are business expenses that can be deducted at tax time.

What your talking about is becoming self-employed. As such you will need to keep records of how much money you earn and when, and how much money you have in expenses - snacks you provide, toys used exclusively for babysitting, etc. No need to do anything fancy just find a method that works for you.

You should speak with a CPA (certified public accountant) Do NOT use a tax service like H&R Block.

Depending on the income you make, you MAY be required to make estimated tax payments with the IRS.

You should let your clients know that you will be reporting your income and provide them with your social security # so they can claim you as a daycare expense on their tax returns, if they choose to do so. There are no special forms for this, however, I do recommend at the end of the year you give them a statement (it's not required).

In addition, there are alot of other issues with running a daycare out of your home.

Talk to your accountant to make sure you file the proper paperwork. You'll also need to pay your estimated taxes quarterly. I believe the form you give to your clients is a 1099 but don't take my word for that. We own our company and we do send a 1099 to those who we've paid any commissions during the year.

I'm guessing some people may choose to pay you cash because there is no tracing cash (ex: tip money, etc) and if you are playing by the book with IRS (which you should do) then some others are going to have to as well because they can be tracked through your system.

The best best is to get solid answers and a plan from your accountant.

You need to keep any earned money, separate and have records of it.
How are you paid? By cash or check?

Then, the person you babysit for... can ALSO claim you/what they pay, on THEIR TAXES TOO. So beware.