Terry D EA Posted February 13, 2009 Report Share Posted February 13, 2009 I am pretty sure I know the answer but money received for baby sitting is considered Sch C income correct? Client baby sits for friends for a total of 2900.00. No 1099's no daycare, but client is honest enough to report the income. So, Sch C with self employment correct??? I am just hoping there is a loop hole as this person is 42 years old, single, no kids, struggling like crazy and this self-employment pushes her out of the EIC by 150.00 and causes a balance due. Again just grasping at straws here. Is there any chance this could be considered other income on form 1040 line 21? Terry D. Quote Link to comment Share on other sites More sharing options...
MN2V Posted February 13, 2009 Report Share Posted February 13, 2009 If the parents are not claiming child care expenses why not consider it hobby income on Ln 21. Quote Link to comment Share on other sites More sharing options...
grandmabee Posted February 13, 2009 Report Share Posted February 13, 2009 I am pretty sure I know the answer but money received for baby sitting is considered Sch C income correct? Client baby sits for friends for a total of 2900.00. No 1099's no daycare, but client is honest enough to report the income. So, Sch C with self employment correct??? I am just hoping there is a loop hole as this person is 42 years old, single, no kids, struggling like crazy and this self-employment pushes her out of the EIC by 150.00 and causes a balance due. Again just grasping at straws here. Is there any chance this could be considered other income on form 1040 line 21? Terry D. Did you use per diem for meals and snacks? Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted February 13, 2009 Author Report Share Posted February 13, 2009 I like the hobby income idea. No I did not use the per-diem for meals and snacks and I do have to talk to my client regarding any expenses. some good suggestions though. I want to see what others suggest before I proceed. Thanks, Terry D. Quote Link to comment Share on other sites More sharing options...
grandmabee Posted February 13, 2009 Report Share Posted February 13, 2009 I like the hobby income idea. No I did not use the per-diem for meals and snacks and I do have to talk to my client regarding any expenses. some good suggestions though. I want to see what others suggest before I proceed. Thanks, Terry D. also do the 8829 Quote Link to comment Share on other sites More sharing options...
OldJack Posted February 13, 2009 Report Share Posted February 13, 2009 Tax preparers are just baby sitting and playing with our clients data. Can we put our income on line 21? Quote Link to comment Share on other sites More sharing options...
MAMalody Posted February 13, 2009 Report Share Posted February 13, 2009 I don't see how you can claim it is hobby income and then try to take the 8829 for a homebased daycare. I would just recommend that you tell it like it is. If she says she does this as a hobby, then okay. If not, then Schedule C and 8829. (that is assuming that this was done in her home, if the client's home, do we have a household employee). Quote Link to comment Share on other sites More sharing options...
grandmabee Posted February 13, 2009 Report Share Posted February 13, 2009 I don't see how you can claim it is hobby income and then try to take the 8829 for a homebased daycare. I would just recommend that you tell it like it is. If she says she does this as a hobby, then okay. If not, then Schedule C and 8829. (that is assuming that this was done in her home, if the client's home, do we have a household employee). you can't do hobby and then take 8829. do sch c take meals per diem and 8829. Quote Link to comment Share on other sites More sharing options...
JohnH Posted February 13, 2009 Report Share Posted February 13, 2009 Does she buy toys for the kids to play with? Does she buy diapers, Desitin, or other such personal-care supplies to keep as spares if the parents forget to bring them? Bibs, high chairs, booster seats? CD's or VCR tapes to entertain the kids on rainy days or to play at nap time? Quote Link to comment Share on other sites More sharing options...
taxtrio Posted February 13, 2009 Report Share Posted February 13, 2009 It's a business. Sch C with whatever deductions she can document. Taxtrio Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted February 14, 2009 Author Report Share Posted February 14, 2009 All of the replies have been interesting. However, I do agree the most with taxtro that it is a schedule C and I have to find the answers to the questions each of you has asked. I am not sure if she does this in her home or the folks she baby sits for. I do know for certian that she is not a household employee. The income was from 5 different people. The question will be what she provides for the children when she is watching them. Now, keep her in your prayers. When I spoke with her this evening, she was very upset because her son was being life flighted to Duke and we agreed to put this on the back burner for now. Owing money to the IRS isn't something she wants to hear right now. Thanks to all of you. Terry D. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 17, 2009 Report Share Posted February 17, 2009 It's clearly a business and not a hobby, if she's keeping five kids. And besides, if it was a hobby it would still be taxable, but honestly, I don't see anyone having a HOBBY of CHILDCARE. That is just not believable. But I'm sure she has some expenses, and that should reduce some of the tax bite. But you have to divorce your sympathy for the client from your responsibility to 'fairly report' the income and expenses. She worked, she earned the money, and she has to pay the tax on it, including the SE tax. Would you be trying to change the numbers on her W2, if she had earned that income at a regular job? Just because that made her make too much to get EIC? I don't think so. It's the same thing. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted February 17, 2009 Author Report Share Posted February 17, 2009 Kc you are right and I have known the correct answer all along I was just hoping for a loop hole of some sort that I may not be aware of. I do like how you stated to divorce my sympathy from the client. I usually do that without a problem. This one kind of got to me so I went out on a limb. My final decision is exactly as you have said. I had some folks from my church here and they were whining about having to pay and insisted that I might have made a misktake. I cannot make a mistake that they earned 10K in interest that is taxable. Hard to swallow but lack of planning on their part doesn't consititute any sympathy on my part. One more thing, I would never under any circumstances change any figures on anyone's tax related documents to help reduce their tax liability. Terry D. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 18, 2009 Report Share Posted February 18, 2009 That is what I thought, I just thought putting it into that context would help you see it clearly. I know sometimes we have a client that we really want to help, even when we know that 'it is what it is'. You would not be the nice person you clearly are, if you did not feel that way some times. Tax code is a mess, and it hurts sometimes to see someone who does not deserve it get a huge refund, while someone who really deserves help has to pay. We've all been there, and we all understand. Quote Link to comment Share on other sites More sharing options...
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