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My mom watched my kids in 2015. I paid her $1500. I do not need to take out SS or medicare as there is exemption for that with family. Does she need to file?

Forum|Forum|6 years ago
June 1, 2019
5 replies
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My mom's only income this year besides this was social security.According to what I read, she does not have to file a tax return if her income is under $11,300 I believe. (and SS income is not seen as income for these purposes). Does she need to file because I paid her? I did not take taxes out of her pay.

Best answer by Hal_Al

You're getting wishy washy answers because the tax code is complicated and convoluted. The correct answer depends on the details.

Reading between the lines, it appears she sat the kids in your home and not hers. That makes her a household employee and not a self employed person. Because she is your parent, she is exempt from the "nanny tax". That is you don't have to pay her social security and medicare (FICA) tax and neither does she.

So the answer is: she is not required to file because she does not have enough income and also does not have to file just to pay FICA tax.

BUT because you have FSA and/or are claiming the dependent care credit, you have to provide her SSN to the IRS. There is a small chance that she will get a letter, from the IRS, that she will have to respond to. Hopefully, she can explain it away, with the facts.

Some experts might advise her to go ahead and file to avert an encounter with the IRS. The $1500 goes on line 7 of form 1040 (or 1040-A) with the notation "HSH".

Carl11_2

I assume she is not considered a household employee since you did not withhold taxes. If a taxpayer's total taxable income for the year is less than $6200, then they do not need to file a return at all. However, if you are planning to take the childcare deduction, that would mean your mother is self-employed and therefore she would be required to file a return with a SCH C. If self-employed and earned over $400, then self-employment tax (SS and Medicare) has to be paid. So while she would not pay the personal side of taxes, she would have to pay the employer side, or SE tax on any amounts over $400.

M

mmjkbaumannAuthor

She is a household employee but I did not withhold taxes. At the time, I figured she could pay when she files taxes. She recently asked me how she should do this or if she needs to file. I was looking online, couldn't find anything and decided to ask here. FWIW, I plan on taking the child care deduction. Also I use a FSA.

M

mmjkbaumannAuthor

Well, no, won't use the child care deduction as I use a FSA.

S

SweetieJean

But you still must document what ypu spent on Child Care for the FSA.

Hal_AlAnswer

You're getting wishy washy answers because the tax code is complicated and convoluted. The correct answer depends on the details.

Reading between the lines, it appears she sat the kids in your home and not hers. That makes her a household employee and not a self employed person. Because she is your parent, she is exempt from the "nanny tax". That is you don't have to pay her social security and medicare (FICA) tax and neither does she.

So the answer is: she is not required to file because she does not have enough income and also does not have to file just to pay FICA tax.

BUT because you have FSA and/or are claiming the dependent care credit, you have to provide her SSN to the IRS. There is a small chance that she will get a letter, from the IRS, that she will have to respond to. Hopefully, she can explain it away, with the facts.

Some experts might advise her to go ahead and file to avert an encounter with the IRS. The $1500 goes on line 7 of form 1040 (or 1040-A) with the notation "HSH".

T

TaxGuyBill

One side note: Your parent (as a Household Employee) is exempt from Social Security and Medicare taxes UNLESS they are watching your child and YOU are divorced (and not remarried) or widowed.
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