Several tax questions, looking for guidance or a place to start?

1. I am a nanny, technically self-employed, the family does NOT take out taxes. Where do I enter this untaxed income when filling out my taxes?

2. I am also a student who received both grants and loans. Do either of these get recorded on my taxes?

Update:

One more question - I am a single mother providing for my daughter. I live at my parents house, do not pay rent but do pay for the rest of expenses that my daughter and I need to live (food, clothes, school, etc.) am I qualified to claim head of household or do I claim single?

5 Answers

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  • 9 years ago

    Quick is right. They should be paying in their part and should be taking out taxes on each pay check. A nanny is not self-employed. You are employed by that family. They are responsible for paying a legal wage and time and a half if you are working over 40 hours. You should of filled out the paper work before starting and you should be getting a W-2. Since you did not pay in any taxes all year, you will be asked to do so now. That could be a little or a lot depending on how long and how much you worked.

    Source(s): me...former live-in governess and live-out nanny
  • Anonymous
    9 years ago

    1. Self employment goes on schedule C. Subtract expenses on schedule C and determine net profit, then put net profits onto your 1040 in the income section on line 12. If net profit is over $400 you also need to use schedule SE to compute self employment taxes, which go onto your 1040 on line 56. This assumes you really are self employed. If you babysit in the person's home you might technically be a household employee which opens up another can of worms.

    2. If your grants & scholarships were MORE than your tuition and books and you got a check for the excess amount to use toward housing or living expenses, then the excess amount is taxable. You should get a 1098-T with the amount of scholarships & grants received and the amount of total qualified expenses. This form will have all the info you need to report the income OR to claim an education credit if you paid out-of-pocket expenses.

    EDIT: You need to claim Single. You aren't paying rent, utilities, etc so there's no way you'll be able to prove you paid more than half the cost of keeping up a home for your daughter. You could let your parent's claim your daughter if you want to, so you should run numbers both ways and let them claim her if it results in a bigger total refund for your household.

  • Anonymous
    9 years ago

    So, you are a nanny and you are going to allow your family to break the law and claim you are self-employed when you are not? By law, they are required to withhold fica/mc from your wages if they pay you more than $1700 per year and then match it. (They can pay both sides, including yours, if they want to.)

    If they fail to give you a W-2 and you decide not to fight this, you would file a 1040, schedule C-EZ and SE. You would need to have them pay you by check so you can photocopy the checks before cashing them. If you plan to file as single and claim EIC for your daughter, you will need to prove you have the income. (Do not even think about filing HOH--you aren't.)

    A W-2 is easy proof. A 1040 schedule C based on cash you sort of got isn't.

    As for school. If the grants are less than your tuition, they aren't taxable, but the same tuition they cover cannot be used for an education credit. If the grants are more than the tuition, the excess is taxable as income.

    Clearly I would recommend that you give your employer a copy of IRS publication 926 and 1040 schedule H. Even if you don't rat them out, they will do it themselves by listing you on form 2441 (the child tax credit) and when the IRS sees that they are they only people you work for, they ought to contact them to ask where the babysitting is taking place. When the IRS realizes it's there house, they can be held liable for all of the fica/mc and a 100% penalty.

  • 9 years ago

    The way you set up the info, you sound like (if you were under age 24 on 12-31-2011) you could be a dependent of your parents. Your daughter would also be the dependent of your parents. (1) Those conditions would be worth a lot more to your family unit than you claiming your daughter to get the EIC (2), which would make her your dependent, not your parents.

    (1) 2011 Pub 17, pg 30, example 1 {or see similar / same online at irs.gov}

    (2) see rules for EIC - pg 243 Rule 9, and other places

    ^^ but confusing this a bit (because the IRS has 2 slightly different definitions for "qualifying child" ) see rule 10, pg 245

    so pay special attn to line 6a on 1040

    Source(s): tax preparer in training, so get more knowledgeable help
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  • 9 years ago

    1) Your nanny income is considered income from self employment. If you are filling out paper forms, you use Form 1040 as your basic form, Schedule C or C-EZ to report income and expenses from self employment and Schedule SE to figure self employment tax (if your net income from self employment is $400 or more for the year). If you are using a tax software program, just be sure that you answer "yes" to the question asking if you have income from self employment; the software will then guide you through the rest.

    2) Loans do not need to be entered on your return. You will only have to claim grants if your total grants exceed your qualified education expenses.

    Edit to add: One of the requirements for filing head of household is that you provide more than half the expenses of keeping up the home for your dependent. Since you do not meet this requirement you will file as single.

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