I have a fifteen year old child who works at a fast food restaurant and babysits. She has kept detailed records of babysitting for the past year and has earned $985. Note: this is not child-care type babysitting at our home since she is a sophomore in high-school - rather evening type sitting when parents go out for dinner / movie and the sitting is always at the parents' homes. And, she has babysat for a dozen or so different families. I'm looking at "Taxable Income for Students" from the IRS web-site and under "Self-Employment Income" it states, "Earnings you received from self-employment are subject to income tax. These earnings include income from baby-sitting and lawn mowing. These earnings are not self-employment income if you provided these services as an employee." According to Topic
756, Employment Taxes for Household Employees, "Household workers are your employees if you can control not only the work they do but how they do it." My child always babysits at the home of the person who asks for her services and follows their instructions and directions as to what she needs to do so it would appear that she is their "employee". The same topic also mentions that an employer should not withold or pay these (employment) taxes from wages if the "employee is under age 18 at any time during the year unless performing household work is the employee's principal occupation. If the employee is a student, providing household work is not considered to be his or her principal occupation.".
work as an employee and therefore not subject to self-employment taxes? It's also presumably earned income. Where should I report it on form 1040? I'm trying to encourage the child to open a Roth-IRA which is another reason I'd like for it to be sure it's reported in the correct category as earned income as opposed to unearned income. Any insights would be greatly appreciated.