MJG CPA Posted February 10, 2008 Report Share Posted February 10, 2008 I have never heard of this before. Teenage babysitter watched 3 kids for a family who paid her $3 per hour. Now they [evidently] want to claim the child care credit and are asking for her SSN. That would be self-employment income to the teenager. My initial thought is to tell them to get lost - if the teenager had known this would become taxable income to her, she never would have accepted $3 per hour!! She doesn't have to provide her SSN, does she? Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 10, 2008 Report Share Posted February 10, 2008 I have never heard of this before. Teenage babysitter watched 3 kids for a family who paid her $3 per hour. Now they [evidently] want to claim the child care credit and are asking for her SSN. That would be self-employment income to the teenager. My initial thought is to tell them to get lost - if the teenager had known this would become taxable income to her, she never would have accepted $3 per hour!! She doesn't have to provide her SSN, does she? I would not advise any client to try to "hide" taxable income. Setting a bad example, isn't it? The folks that paid her, can claim it anyway, and provide the IRS with name and address. It isn't ethical, (In my NOT SO HUMBLE OPINION) to suggest not providing the SS#. It will only be a few dollars, and a very CHEAP lesson about how life is going to be later. I would instead, teach the teen a bit about work, pay, taxes, etc. Most don't get any training about these matters from their parents. Quote Link to comment Share on other sites More sharing options...
MJG CPA Posted February 10, 2008 Author Report Share Posted February 10, 2008 I would not advise any client to try to "hide" taxable income. Setting a bad example, isn't it? The folks that paid her, can claim it anyway, and provide the IRS with name and address. It isn't ethical, (In my NOT SO HUMBLE OPINION) to suggest not providing the SS#. It will only be a few dollars, and a very CHEAP lesson about how life is going to be later. I would instead, teach the teen a bit about work, pay, taxes, etc. Most don't get any training about these matters from their parents. No, I didn't intend to advise anyone to hide income, but babysitting money? After looking into it further, I believe the babysitter would be treated as a household employee. However, since she is under age 18, no taxes are required to be withheld, and if no taxes are withheld, there is also no obligation for the household employer to issue a W-2. The child, with or without a W-2, could claim the income, but it is under the amount at which she is required to file. So I guess in the end, there is no issue, but I just thought the whole scenario was a little strange. Quote Link to comment Share on other sites More sharing options...
1040PRO Posted February 10, 2008 Report Share Posted February 10, 2008 If you get past the issue of whether she should claim it or not i would never give any one my SS#, I have my clients get and EIN via SS4. Because I am sure most of you have heard about identity theft and one way to help stop it is reducing who you give it to. Just because you trust your family, freinds, doctor etc once you give it out, how well do these peolpe really protect it in the future. CLIFF 1040PRO of AZ Quote Link to comment Share on other sites More sharing options...
JohnH Posted February 10, 2008 Report Share Posted February 10, 2008 The cheapskate employers probably never thought to ask for the SS# until after going to have their tax return prepared, because now "They've Got People". Quote Link to comment Share on other sites More sharing options...
Cathy Posted February 10, 2008 Report Share Posted February 10, 2008 MJG, I would definitely discuss the minimum wage issue with my client and her employer (if necessary) before your client releases her social security number....also the household employee under age 18 issue regarding household work (if any). Ahhh, the webs we (THEY) weave! Quote Link to comment Share on other sites More sharing options...
Cathy Posted February 10, 2008 Report Share Posted February 10, 2008 MJG, Also...I'm sure you have thought about it....but make sure the employer knows he/she is NOT to issue a 1099 showing a "non-employee" amount. Quote Link to comment Share on other sites More sharing options...
MJG CPA Posted February 10, 2008 Author Report Share Posted February 10, 2008 MJG, Also...I'm sure you have thought about it....but make sure the employer knows he/she is NOT to issue a 1099 showing a "non-employee" amount. Yes, I did tell them that. And the babysitter was not asked for SSN up front as she should have been if they intended to treat her as a household employee; only now that the cheapskates want another deduction. Quote Link to comment Share on other sites More sharing options...
SunTaxMan Posted February 10, 2008 Report Share Posted February 10, 2008 "She doesn't have to provide her SSN, does she?" Was babysitter hired? Was babysitter being paid? Simple questions, simple answers. Want more complications to frustrate your client? W-4 and I-9! Both are required. Re: 1099 instead of W-2? I don't think so. Control? Would parents allow babysitter to send another person in babysitter's place to do the babysitting? I think I would want to know WHO was doing the babysitting! I would insist on that element of control! Quote Link to comment Share on other sites More sharing options...
MJG CPA Posted February 10, 2008 Author Report Share Posted February 10, 2008 "She doesn't have to provide her SSN, does she?" Was babysitter hired? Simple question, simple answer. Want more complications to frustrate your client? W-4 and I-9! Both are required. Exactly my point. If they were going to treat her as an employee, they should have required both of those things up front, not after the fact now that they want another deduction. BTW, I have advised babysitter to provide SSN but also provided info on Household Employer to give to parents/employer so they know their responsibilities. Quote Link to comment Share on other sites More sharing options...
Diane Posted February 10, 2008 Report Share Posted February 10, 2008 Did this teenager babysit during the day while this couple were working? I guess I was wondering if the babysitting really did qualify as child care. Quote Link to comment Share on other sites More sharing options...
jainen Posted February 10, 2008 Report Share Posted February 10, 2008 >>That would be self-employment income to the teenager.<< No it wouldn't. The profit motive is so minimal that she obviously was not conducting a trade or business. The parents may want the credit. but so what? They don't determine how the teenager treats her own income. Assuming the girl is now disgusted with the family's greed and doesn't want to be their slave anymore, she should explain that she intends to keep her SSN to herself. She's probably afraid to do that, so I think it appropriate for the tax advisor to make the phone call. And while they're on the line, be sure to warn them that if you find out that they have claimed a credit for her work, you will file a complaint with the labor board because the girl didn't have a school work permit, a clear violation of child labor laws. Quote Link to comment Share on other sites More sharing options...
bay Posted February 11, 2008 Report Share Posted February 11, 2008 I have never heard of this before. Teenage babysitter watched 3 kids for a family who paid her $3 per hour. Now they [evidently] want to claim the child care credit and are asking for her SSN. That would be self-employment income to the teenager. My initial thought is to tell them to get lost - if the teenager had known this would become taxable income to her, she never would have accepted $3 per hour!! She doesn't have to provide her SSN, does she? Have the teenager tell the couple that she would be more than happy to give them her soc sec number provided they give her a copy of their Workers compensation coverage because if she trips over a transformer or a doll and breaks her arm she wants to make sure her medical expenses woudl be covered because otherwise she would have to file a LAWSUITE against the couple. On a side note - I can't believe all the posts from a Sunday - I need a day off Good luck Quote Link to comment Share on other sites More sharing options...
lbbwest Posted February 11, 2008 Report Share Posted February 11, 2008 I have never heard of this before. Teenage babysitter watched 3 kids for a family who paid her $3 per hour. Now they [evidently] want to claim the child care credit and are asking for her SSN. That would be self-employment income to the teenager. My initial thought is to tell them to get lost - if the teenager had known this would become taxable income to her, she never would have accepted $3 per hour!! She doesn't have to provide her SSN, does she? Topic 756 - Employment Taxes for Household Employees Household employees include housekeepers, maids, baby-sitters, gardeners, and others who work in or around your private residence as your employees. Repairmen, plumbers, contractors, and other business people who work for you as independent contractors, are not your employees. Household workers are your employees if you can control not only the work they do but how they do it. If you pay a household employee cash wages of more than the amount specified by law in a tax year, you generally must withhold social security and Medicare taxes from all cash wages you pay to that employee. (Cash wages include wages you pay by check or money order.) Unless you prefer to pay your employe's share of social security and Medicare taxes from your own funds, you should withhold a certain percentage set by law from each payment of cash wages. The specified dollar amount and percentages can be found under the topic "Do You Need To Pay Employment Taxes?" in Publication 926 (PDF). Instead of paying this amount to your employee, pay it to the IRS with a matching amount for your share of the taxes. If you pay your employe's share of social security and Medicare taxes from your own funds, these amounts must be included in the employe's wage for income tax purposes. However, they are not counted as social security and Medicare wages or as Federal unemployment wages. However, do not withhold or pay these taxes from wages you pay to: your spouse, your child who is under age 21, your parent, unless an exception is met; or an employee who is under age 18 at any time during the year unless performing household work is the employe's principal occupation. If the employee is a student, providing household work is not considered to be his or her principal occupation. Quote Link to comment Share on other sites More sharing options...
Julie Posted February 12, 2008 Report Share Posted February 12, 2008 Send them a copy of pub 926. See what form they give her. We already know she's a household employee. A 1099 is a blatant attempt to avoid paying employment taxes. The child care credit depends on their doing this correctly. She needs a W2. If they give her a 1099, challenge it with IRS and any relevant state agencies. Topic 756 - Employment Taxes for Household Employees Household employees include housekeepers, maids, baby-sitters, gardeners, and others who work in or around your private residence as your employees. Repairmen, plumbers, contractors, and other business people who work for you as independent contractors, are not your employees. Household workers are your employees if you can control not only the work they do but how they do it. If you pay a household employee cash wages of more than the amount specified by law in a tax year, you generally must withhold social security and Medicare taxes from all cash wages you pay to that employee. (Cash wages include wages you pay by check or money order.) Unless you prefer to pay your employe's share of social security and Medicare taxes from your own funds, you should withhold a certain percentage set by law from each payment of cash wages. The specified dollar amount and percentages can be found under the topic "Do You Need To Pay Employment Taxes?" in Publication 926 (PDF). Instead of paying this amount to your employee, pay it to the IRS with a matching amount for your share of the taxes. If you pay your employe's share of social security and Medicare taxes from your own funds, these amounts must be included in the employe's wage for income tax purposes. However, they are not counted as social security and Medicare wages or as Federal unemployment wages. However, do not withhold or pay these taxes from wages you pay to: your spouse, your child who is under age 21, your parent, unless an exception is met; or an employee who is under age 18 at any time during the year unless performing household work is the employe's principal occupation. If the employee is a student, providing household work is not considered to be his or her principal occupation. Quote Link to comment Share on other sites More sharing options...
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