Do Babysitters Have to Pay Taxes?

Why babysitters shouldn’t get paid under the table 

Sure, it’s tempting to ignore the whole thing and get paid under the table in cash. But not reporting income can have serious legal and financial consequences. 

The IRS can send you a bill

If you don’t file taxes at all, the IRS can estimate your tax bill for you. It will exclude many of the deductions that you could have taken if you’d filed properly, meaning you’ll end up paying more.

You might owe extra money

Additional penalties for sending in late or inaccurate tax returns — or for failure to pay what you owe — can go up to 25% of what you owe, plus interest.

You could even be charged with intent to defraud the IRS if it finds that you deliberately failed to report your income.

You might miss out on refunds or benefits

There are some advantages to getting paid on the books. For one thing, if your employers have withheld anything for you, filing taxes is the only way you can get a refund.

Additionally, if you get paid under the table, you’ll lose out on future benefits, like:

• Social Security
• Unemployment
• Health insurance subsidies 

It’s harder to get a loan

Finally, it’s far easier to build a credit or employment history if you pay your taxes regularly. That’s extremely important if you want to buy a home or get a personal loan. 

Bottom line: Even if your employment agreement is casual and you get paid in cash, you should still report your babysitting income. This holds true whether you’re working for four or 40 hours a week, and whether you’re an independent contractor or on a family’s payroll.

Sometimes, though, it can be hard to figure out your employment status.

Does babysitting count as self-employment?

Babysitters usually work as independent contractors. But if a particular family pays more than $2,600 a year, you’ll be considered their “household employee.” That means they have to withhold money from your pay for taxes, give you a W-2 form, and cover some taxes on your behalf — which we’ll get into later. (You might have heard this referred to as a “nanny tax.”)

Here are some general rules to help you figure out your work status:

You may be an independent contractor if you:

• Work for multiple families
• Have control over your schedule
• Provide your own tools and supplies
• Babysit as a side hustle

You may be an employee if you:

• Work for an agency
• Have set hours
• Have someone else controlling your schedule and duties on the job
• Use the household equipment and supplies they provide you

What taxes do self-employed babysitters pay?

If you are self-employed as a nanny or babysitter, you’re responsible for paying several types of taxes on your own.

Self-employment tax

This is how independent contractors pay into Social Security and Medicare, collectively known as FICA.

Basically, every worker has to pay Social Security and Medicare taxes, but for W-2 employees, their employers cover half. This includes nannies and babysitters who work as household employees.

On the other hand, if you’re a 1099 contractor, you’ll have to pay a self-employment tax equal to both the employer and employee portions of FICA added together.

This self-employment tax comes out to about 15.3% of your net income after expenses. (More on those later!) When you file taxes, you’ll use Schedule SE to calculate exactly how much it is.

Federal income tax

FICA tax isn’t the only money you’ll be paying to the federal government. You’re also responsible for income taxes on top of it.

What does the standard deduction mean for your income taxes?

You won’t actually have to pay income taxes if babysitting is your main source of income and you earn less than the standard deduction. That’s a tax break all US taxpayers can claim — even self-employed people who want to deduct their business expenses on top.

For 2023, the standard deduction amounts are:

• For single filers: $13,850
• For married filers: $27,700
• For heads of households: $20,800

Note: If you babysit as a side hustle on top of a day job, you’ll likely end up paying some income tax on your childcare earnings — even if they’re less than the standard deduction.

This happens because your income tax bill is calculated based on your total income for the year, no matter where that income came from. In this case, it would be based on your day job and babysitting earnings put together. It’s impossible to split out which part, exactly, came from babysitting specifically.

State income tax

Calculating your federal taxes might seem daunting — and it’s certainly going to be your biggest tax bill. But that’s not where your tax obligations end.

You’ll also have to pay state taxes on your babysitting income, unless you live in one of these states:

• Alaska
• Florida
• Nevada
• New Hampshire
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

Regardless of where you live, there are some tax forms you should know about. These forms report your income from babysitting. You, the IRS, and potentially your state will all get copies, so the tax authorities know how much money you have coming in.

What tax forms should your babysitting clients give you? 

If you’re a household employee, you’ll get a W-2. If you’re self-employed, you’ll get some kind of 1099 form. The exact kind depends on how you were paid and how much you made.

1099-NEC: For direct payments from families and babysitting apps

If you’re self-employed and make at least $600 from a single client, they should give you a 1099-NEC if they paid you through:

• Cash
• Check
• Direct deposit

1099-K: For Venmo, Care.com, and other app-based payments

If you were paid through an app like Venmo or PayPal, you might get a Form 1099-K. These forms report business payments made through credit cards and third-party networks. Some platforms and apps also issue them, including:

• Care.com
• Bambino

How much do you have to make to get a 1099-K?

Historically, “the law stated that you should be issued a 1099-K if your gross income was $20,000 a year and you had more than 200 transactions through a mobile cash app,” said Thomas P.M. Perry, a Houston-based CPA.

Starting in 2023, however, if “you earn more than $600 and are paid that through any one platform, you will be issued a 1099-K reporting the income.”

1099-MISC: Not used for babysitters

You shouldn’t get a 1099-MISC. That form is used for miscellaneous payments, not independent contracting work in childcare. To learn more, you can read our article on the difference between 1099-NECs and 1099-MISCs.

How to figure out your gross income from babysitting

If you’re self-employed, you’ll need to add up the amounts on all your 1099s to calculate your gross income — the total amount of money you had coming in.

When you file taxes, you’ll report that number on your Schedule C, the form you use to report your earnings and any expenses you paid to do your job. Remember, the IRS gets copies of all your 1099s, so it’ll expect to see a number at least as high as all your 1099s added up.

What do you do if you don’t have 1099s for all your income?

It’s not uncommon to be missing 1099s for some of your babysitting gigs. If a client paid you less than $600 all year, they won’t have to give you a 1099 at all. It’s also possible for one of them to make a mistake and send you the form late — or not at all.

No matter why you’re missing a form, you won’t get in trouble for it. And you can absolutely report your income without it.

Just sum up the income you don’t have 1099s for and add it to the income you do have 1099s form. That’s your gross income.

Luckily, you don’t have to pay taxes on your gross income. You get to subtract all your business write-offs — the expenses you rack up while babysitting.

How to pay less in babysitting taxes using business write-offs 

As a self-employed babysitter, you’ll only get taxed on your profit. For example, if you make a combined $1,000 from apps like Sittercity and Bambino, but spend $300 on odds and ends for your gigs, you’ll only be taxed on $700.

You’ll claim these write-offs on your Schedule C. As mentioned, you can take them on top of the standard deduction.

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What kind of babysitting expenses can you write off?

To count as write-offs, your babysitting expenses have to be:

• Ordinary: Common and expected for a babysitter
• Necessary: Helpful — if not actually indispensable — for your job

Here are some examples for you:

• ⛽ Gas for driving between client homes, schools, activities, appointments, and playgrounds 
• 🧽 Supplies you use on the job, like first aid kids, crafting materials, and cleaning supplies
• 🪧 Advertising costs, like printing neighborhood fliers or hiring copywriters for app listings
• 🥨 Snacks for the kids you babysit
• 🪪 Childcare certifications from Safe Sitter or the American Red Cross
• 📚 CPR training and certifications
• 💵 Membership fees for organizations like the NAFCC and Child Care Aware of America
• 🔎 Background checks and other screening fees (that your clients didn’t cover)
• 🛡️ Insurance, including liability insurance
• 💳 Credit card and bank fees‍
• 📱 Cell phones you use to find and communicate with clients
• 📺 Part of your Netflix, Disney+, or PBS Kids subscription, if you use it to entertain your charges
• 🏠 Part of your rent and utilities, if you take care of children at home

Note that if an expense is used for personal reasons too, then you can only deduct a proportion you use for your babysitting jobs. This might apply to your phone or Netflix account, for instance.

Self-employed people tend to miss out on these expenses because keeping track of them can be a lot of work — a mess of spreadsheets, grocery store receipts, and tax season migraines. It’s a lot to deal with when you’re running after eight-year-old twins. 

‍Keeper can take the hassle off your hands. The app will track what you spend on babysitting gigs, so you can spend your time and energy on your charges. We’ll even help you split out expenses that are only partially used for work.

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Tips for covering your babysitting taxes

As a rule of thumb, you’ll be taxed at least 15.3% of your income after expenses. To figure out how much you should set aside for both self-employment and income taxes, try Keeper’s free 1099 tax calculator. 

If the calculator spits out a painful-looking number, don’t worry. There are a couple of strategies that will save you from paying it all at once.

Tip #1: Avoid paying too much tax at once with quarterly tax payments

If you’re an independent contractor who earns a fair amount from babysitting, and you want to avoid a giant tax bill, consider paying estimated taxes every quarter throughout the year. You’ll be penalized for not paying these if you owe more than $1,000 in taxes.

Unsure if you need to worry about estimated taxes? Use Keeper’s quarterly tax calculator to find out. It’s easier than working through IRS Form 1040-ES to help you calculate your estimated tax payments. 

Your quarterly taxes are due on:

• April 15th
• June 15th
• September 15th
• January 15th of the next year

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Tip #2: Use withholding to cover babysitting taxes as a side hustler

If you babysit on the side of a W-2 day job, ask to have extra pay taken out of your W-2 paycheck. This will let you cover your side hustle taxes as well — without having to worry about quarterly payments.

This is called increasing your withholding. Ask for it by giving your W-2 employer an updated Form W-4.

How do you handle babysitter taxes as a minor?

Babysitting is a common first job for teens. If you’re a minor who’s working as a babysitter, you’ll need to report your income by filing taxes as long as you’re making more than $400 a year.

Whether you end up paying taxes, though, depends on how much you earn — and how you earn it.

Do minors owe taxes on their babysitting income?

Yes, if you’re self-employed. Let’s cover income tax and self-employment tax separately.

Income tax

If you’re a minor who makes less than the standard deduction, then you don’t have to pay income taxes. Again, that’s $13,850 for 2023.

Self-employment tax

If you work as an independent contractor instead of a household employee, you will owe self-employment tax as long as you made $400 or more. Just like an adult who contracts, you can write off your gas and other work expenses to bring your tax bill as low as possible.

No matter how old you are, you can avoid clashing with the IRS over your babysitting income as long as you stay organized and get help when you need it. 

That’s where Keeper comes in. Download the app, and we can keep up with your expenses and help you with filing, whether you’re doing your taxes for the first time or finagling babysitting income alongside earnings from a day job.

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If you have questions about your specific situation, you can always reach out to us at support@keepertax.com.