minor babysitting + Roth

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.".

From the above can I conclude that the her babysitting work is considered

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.

Reply to
Cary Seller
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I certainly agree with your interpretation. She was an employee while baby sitting in others' homes, and her income therefrom should be reported simply as wages included on line 7. It is/was the employer's duty to withhold or pay over ss tax.

ChEAr$, Harlan Lunsford, EA n LA

p.s. I hope nobody will venture to suggest use of the new form 8919.

Reply to
Harlan Lunsford

This link should help answer the question:

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employers were not required to withhold tax or report anything. Both because the sum paid was under $1500 in 2007 and because the employee was under 18. Either of these is enough to be off the hook for any 'nanny tax'. I might add - when I had a nanny, and did it right, it was painful. Federal and State (Massachusetts) rules were different on how to withhold and pay the taxes withheld. There has to be a better, easier way. I'm sure compliance would rise with an easier system. JOE
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Reply to
joetaxpayer

Yes. To me babysitting in the child's home is one of the few always clear-cut employer/employee relationships.

Line 7 wages.

Note that because of your daughter's age these wages are exempt from FICA/Medicare.

I've known parents who encourage Roth contributions by their children by offering to match the child's contribution, sometimes even 2 or 3 to 1. Some go so far as to just make the contribution in the full amount of the child's earned income, but since I'm childless and an expert at child rearing, I assure you that's too much reward for zero sacrifice by the child.

Reply to
Phil Marti

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