Tax Tips for Part-Time Caregivers
If you're an after-school nanny, pet sitter, housekeeper or other type of part-time caregiver, learn about your tax responsibilities.
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.
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.
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 »
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.
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* 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.