Do We Need to Give Our Babysitter a 1099 Tax Form?

No 1099 needed, but you may still have paperwork.

No 1099 needed, but you may still have paperwork.

Hiring a babysitter for your kids doesn't require a 1099 form, no matter much she charges. Businesses send out a 1099-MISC when they pay a non-employee $600 or more over the course of a year. That's only a requirement for businesses -- when you pay someone for services away from the office, you're off the 1099 hook.

Paid Child Care

Whenever someone takes care of your child for money, he's making taxable income. This applies even if you pay the child's older brother or another relative to do it. If it's someone who just drops by when you need her, the IRS classes the sitter as self-employed. In that case, it's the babysitters' responsibility to report her income and pay taxes on it. If you hire a live-in nanny, however, you're a household employer. In that case, the IRS expects a lot more paperwork.

The Nanny

If you pay your child's nanny above a certain level, you have to withhold Social Security and Medicare from her wages. You don't have to withhold income tax unless she asks you to. If she does requiest it, have her fill out a W4 withholding form and follow the instructions in IRS Circular E. Taxable pay includes cash and non-cash wages, but the IRS says not to count meals and lodging you provide her at your home.

Child Care Credit

If you pay a babysitter or a nanny so that you or your spouse can work or look for work, you may qualify for the child-care tax credit. The credit lets you deduct a percentage of child-care costs off your taxes, provided the child is younger than 13 and the caregiver isn't your spouse, the child's parent or a sibling younger than 19. To claim the credit, you don't need a 1099, but you will have some extra paperwork.

Credit Records

To claim the credit, you need to keep track of how much you pay your nanny or babysitter through the year. Use that to figure out how big a write-off you can take. You also need the name, address and taxpayer identification number -- usually the same as the Social Security number -- for any child-care providers you hire through the year, to identify them to the IRS. If you can't get the information, you need to show the IRS that you tried your best.

 

About the Author

Author of two film reference books, "Cyborgs, Santa Claus and Satan" and "The Wizard of Oz Catalog." Published in Air & Space, Backpacker, Newsweek, The Writer, and multiple trade journals (can fax samples if requested, don't have them available digitally)

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