What are the taxes to comply with preschool?

How do i go about doing taxes for childcare?

• i wasnt going to file taxes this year. i live off my trust fund which isnt taxed. I took a babysitting job to help out my neighboor. i babysat for her 2 days a week at her house for about 10 hours a week. she never told me about taxes when she hired me so i just thought it was under the table. well she is now claiming the childcare on her taxes as if i were a daycare person.. when i actually came to her home when she scheduled me. i looked it up on the irs.gov and it says when u hire a babysitter ur suppose to take out taxes on pay days and she never did. like i said shes reporting me as a daycare person. i have no daycare no license or anything. could she get introuble for this?? this is what i found online Question: "Do I Have to Pay Nanny Taxes?" Answer: New working parents often ask whether they have to pay nanny taxes. Generally the answer is, "Yes, you must pay your nanny's Social Security and Medicare (FICA) to comply with federal law." You owe nanny taxes if you pay the same adult babysitter more than a set amount every year, which was $1,600 for 2008 and $1,700 for 2009. The same holds for a housekeeper, gardener or other household worker who earns more than the threshold. So if you pay your child's sitter $35 every week for Saturday night babysitting, you owe nanny taxes -- more formally, Social Security and Medicare taxes. It's not complicated to pay nanny taxes, but you do need to set aside some time to make sure you complete the forms correctly. I strongly advise you to pay nanny taxes if you're over the limit. Not only does it keep you right with the law, your contributions will increase your babysitter's reported Medicare and Social Security pay. That ultimately should boost any Social Security payments she receives in retirement. You do NOT have to pay the nanny (or other household worker) taxes if they meet the following conditions: * If your nanny is employed by an agency or third party, who controls what work is done and how it is performed. * If your child's sitter provides care in her own home, she's generally not your employee. * If your child is cared for by your spouse or your child under the age of 21. * If your babysitter is a student under age 18. (If she's not a student and babysitting is her principal occupation, you owe nanny taxes.) * If your parent cares for your child. (Exception: if you're a single parent or your spouse is physically unable to care for your child, you likely owe taxes.)

• Answer:

  Why is it that people think if it's cash and under the table, they didn't have to report the income. If she did this properly, income up to $1600 would have just been entered by you on the tax return with code HSH and she wouldn't have to issue a W-2. But 20 hours at $10/hr exceeds $1600 after about 10 weeks. so then she's suppose to issue you a W-2, withhold for fica/mc and pay that into the IRS when she files her tax return. (This should have occured to her when she started to list you as the childcare provider. The instructions mention that the fica/mc she paid is part of the cost she can list on the form 2441.) Since she didn't plan for this, you can either go back and tell her to ramp up yoru pay and issue the W-2 properly or that she can risk not being hit with penalties down the road and you'll pay both sides of the fica/mc on your tax by filing a schedule C-EZ and SE. (Legally you can't pay her tax bill, so she can STILL be made to pay the tax and a 100% penalty by the IRS.) So, if she paid you $5000, you will pay $765 on your tax return instead of the $383 you would have had withheld on the W-2. (The other $383 was HER tax.) Either way you were responsible for paying any income tax. PS, if you are living off the income of the trust fund, it had better be invested in tax-exempt municipal bonds...otherwise it *is* taxable income to you.