Question

We didn’t give a W-2 or a 1099 to our babysitters who work in our home. Are we required to do so?

Answer

First, to address nanny and/or babysitter taxes, you need to determine if the babysitter(s) are self-employed or household employees.

If you control how the work is performed, the babysitter is a household employee. If the babysitter controls how the work is performed, the babysitter is self-employed.

Note: In most cases a babysitter/nanny would be an employee. However, in limited situations (e.g., a sitter hired through an agency for a short-term) there could be an argument for independent contractor status.

Self-employed workers usually provide their own tools. They offer their services to the general public in an independent business.

If a babysitter or nanny is self-employed, you don’t have reporting or withholding. The babysitters still must report their income to the IRS. However, you don’t need to issue a Form 1099-MISC to the babysitter. This is because you aren’t paying the babysitter in the course of your trade or business. Payments to babysitters are usually personal in nature.

If the babysitter is your employee, you must provide a Form W-2 if one of these is true:

  • You paid the employee at least $2,100 in 2018.
  • You paid the employee wages of any amount, and you withheld federal tax.

If you meet one of those rules, you must issue a W2 regardless of the age of the babysitter.

Complete a Form W2 and give copies B, C, and 2 to the employee by Jan. 31, 2019. To file these forms, you’ll need a tax ID. Send the W-2, copy A with the W-3 to the Social Security Administration by the last day of February — or the last day of March if you e-file the W-2.

If you don’t meet these requirements, you’re subject to two separate civil penalties. The penalties can be up to $100. You can reduce the penalty by filing the required forms within 30 days of the deadline.

Related Topics

Related Resources

IRS Letter 105C – We Couldn’t Allow Your Claim

Learn more about letter 105C and how to handle an IRS 105C letter with help from the tax experts at H&R Block.

Three Ways to Reduce or Remove IRS Interest from Your Tax Bill

Worried about IRS interest? See if you might qualify to have your interest reduced or removed. Learn more from the tax experts at H&R Block.

Chapter 7 Bankruptcy: 1099-C And Form 982

What does a Form 1099-C and Form 982 have to do with bankruptcy? Learn more from the tax experts at H&R Block.

IRS Notice CP14 – Balance Due

Confused about your CP14 notice from the IRS? Learn more about this notice and what steps you should take. Get tax answers at H&R Block.