cash jobs

[bige1030]

Also, if that is all she makes, she wouldn't owe much in taxes anyway, maybe even none if she qualifies for the earned income credit.

The OP mentioned that her cousin makes close to the median income and would be put over it by the money she makes from this odd job...and a good estimate for the income taxes on that income would be 25%.

(which babysitters are considered "household workers" on the IRS forms)

In general, only babysitters who work in the house of the client are considered "household workers." If the OP's cousin takes care of the kids in her own house (and not that of the client), she is generally considered an independent contractor. Reference: http://www.irs.gov/businesses/small/...=97877,00.html

Important to note: If she is an independent contractor, she will also owe 15.3% self-employment tax on 92.35% of the income she makes from the odd job. This is in addition to the income tax - it is her Social Security and Medicare contribution.

[Spartan]

So, she has to pay close to 25%+15.3% = 40% of the money in taxes? Why bother to work extra then?

I wouldn't mind paying 40% if my income is 6 or 7 figures. But I wouldn't want to baby sit and end up with a lousy one and a half Ben Franklin a month.

[bige1030]

Yeah, being self-employed is kind of a raw deal...you've got to do the "employer matching" with your Social Security and Medicare tax, since you're your own employer.