Tax Tips for Part-Time Caregivers

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You can make a great living working for many families instead of just one. Maybe word has spread about your reliability as a pet sitter and you work for 15 regular families every week. Or maybe you juggle two nanny jobs -- one in the morning and the other in the afternoon. Maybe your niche is spring cleaning, making the homes of families sparkle after a deep clean. While being hired for so many jobs is great, have you ever wondered about what kinds of taxes you need to pay?

Just because you aren't considered a full-time employee with one family doesn't mean you don't have to pay taxes. If you earn $1,900 from any one family in a given year, and you don't own your own business or work for an agency, your employer should be paying part of your taxes as well.

If you don't earn that much from any one family, they don't have to pay household employment taxes. You, however, still need to claim the earnings on your personal income tax return, under "other income."

Here are three common scenarios that part-time workers fall into. Find the right solution for your situation.

  1. I Work for Several Families
    You might work for 50 families in a given month of pet sitting, but if any one of those families pays you $1,900 or more in a calendar year, you are technically considered their employee by IRS definitions. If that's the case, your employer is responsible for paying taxes on your entire earnings and you also need to pay employee taxes.

    "It's a good idea to keep track of what you earn from each family, so you have a running total of your income for the year," suggests Stephanie Breedlove, vice president of Care.com HomePay.

  2. I Earned $2,500 Babysitting for One Family this Year
    Even if it's only a little bit over the limit, the law requires your employer to pay taxes on your earnings. And even if they want to pay you under the table, it's in everybody's best interests to follow the law, says Lisa Weinberger, a lawyer and founder of Mom, Esq.

    If the family is ever audited, they could be fined for a felony tax evasion. And, as an employee, getting paid legally helps you build up an employment history that can be verified (important for things like mortgages and car loan), and you will be eligible for benefits like Social Security or disability if you ever need them.

    Learn about the 7 Reasons NOT to Get Paid in Cash »

  3. My Part-Time Job Turned into a Full-Time Job
    Just as your job changes, your tax status will very likely change when your work goes from part-time to full-time work. If your sporadic job suddenly becomes much more regular, your earnings will increase and you'll probably reach the $1,900 threshold quickly. You'll need to talk to your employer about how your taxes will be paid. It might be more of a hassle at first, but will pay off for both of you in the long run.

No matter how your work schedule comes together, it helps to know what tax rules and regulations you need to follow. Monitoring your changing income will help both you and your employer (or employers!) keep everything on the up and up!

If you've never paid taxes before, check out our tax articles for some advice to walk you through the process.

Julia Quinn-Szcesuil is an award-winning freelance writer and a mom to two girls. She lives in Massachusetts and has written for local and national publications.

Your Next Steps:

* The information contained in this article should not be used for any actual caregiver relationship without the advice and guidance of a professional advisor who is familiar with all the relevant facts. The information contained herein is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for your specific circumstances and may require consideration of other matters.

For more tips and advice, check out these Nanny Tax Articles.

9 Comments

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MacJones

Thank you so much for this info. Appreciate your time and effort. Thanks again to all . You can also add Earn Honey as a paid site . It is fully free and very easy .
May 10, 2016 at 4:16 AM
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Tom B.

Hello Denise. I'm Tom Breedlove, Director of Care.com HomePay and I can help you with your question. Care.com actually has a rate calculator you can use to determine a estimate of how much you should pay your caregiver. You can find it at http://www.care.com/babysitting-rates
October 17, 2014 at 10:04 AM
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Denise M.

I live in IL. What is the current rate for a new born about 3 months old? I would be doing mon - wed. Aprox. 21hours a week. As of 2014 what are the rates?
October 15, 2014 at 3:27 PM
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Stephanie B.

Hi DSikora! The only thing you'll need to do is provide the family with your address and your Social Security number in order for them to claim the childcare tax credit. The form the family has to fill out requires this information.
June 25, 2014 at 2:44 PM
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DSikora

I have a family interested in hiring me on a weekly rate of $175 for 2 children at roughly 21hrs per week. They would like to claim the childcare on their income tax. What do I need to do on my end, so they can claim it? This is my 1st time being asked, so I have no idea where to even begin to look. Thank you in advance
June 25, 2014 at 1:05 AM
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Stephanie B.

Hi Linda, This is Stephanie Breedlove with Care.com HomePay. I'm not 100% sure what your classification is based on the information you provided. If you are truly an independent contractor running a daycare service, the things you mention would be correct. However, if you are a household employee, a 1099 is not the correct way to do your taxes. Household employees work for a family in their home, taking their direction, working the hours they assign, etc. The key is who has control of the working relationship. The IRS has a great resource you should look at (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee) to see where you fit.
February 04, 2014 at 5:26 PM
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Linda H.

The family I work for issued me a 1099 for my earnings. I treat my income as business income. I deduct mileage and any supplies I purchase for crafts. I pay quarterly estimated taxes to IRS. Am I doing something wrong???? Linda H.
February 04, 2014 at 4:22 PM
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Stephanie Breedlove

Hi Kurline! My name is Stephanie Breedlove and I am the VP of Care.com HomePay. I'm so glad to hear you push so hard for families to do the right thing and pay on the books. In the short and long-term, it benefits both you and the family. My suggestion would be for all household employees to familiarize themselves with the benefits being paid on the books gives to them (http://www.breedlove.com/Answers/EmployeeInfo/WhyProfessionalPayPaysOff.aspx). When discussing taxes with the family, it gives you tangible evidence to show why being paid as a professional is the right thing to do for your well-being. And on the other hand, the family needs to be familiar with their benefits because paying on the books entitles them to tax breaks (http://www.breedlove.com/Answers/Nanny-Tax-Benefits.aspx) and ensures they won't run into issues with the IRS or state tax agencies down the road. I hope you are able to find a family that will choose to pay legally Kurline!
December 19, 2013 at 3:04 PM
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Kurline A.

with all these tax information on here, still families hire folks and when asked to pay taxes, don't want to. It's becoming so annoying to me, I boldly stated in in my profile that I can only do on the books employment. Wish there was a special section on site for families who wants to pay taxes.
December 18, 2013 at 9:37 PM

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