self-employment income

[monlyba]

i have no assets and no job right now, so i'm planning to file ch 7 pro se as soon as i can get all the paperwork and fees together. i've been reading the Nolo book in my spare time and coming on here to learn and it's really helping me feel like i can do this without an attorney.

i am technically not employed right now, but i babysit a child for $120-$150 per week (depending on if she comes every day). i haven't registered as a business or anything, but mom writes me a check each week and i deposit it into my bank account so it's traceable. i wasn't planning on reporting it when i file my tax return next year, but i was going to include it when i file bankruptcy papers. is that possible? i guess what i'm worried about is any communication between the court and the IRS. i will certainly file it on my taxes if i really need to, but of course i'm already broke so i am not looking forward to paying taxes on the money come April.

[confusedinVA]

Yes, you really do need to claim the income to IRS. You can bet that mom will want to use that as a deduction on what she will owe. I also do childcare in my home. I watch more children than you do and last year when I filed, I did not owe any taxes. You are allowed to use quite a few deductions such as: portion of your food bill, portion of your rent or mortgage(depending on how much space you use for childcare in your home) a portion of your utilities bills, etc. For example, Let's say I made 12,000 after all of my deductions it then showed that I made 7,000. That is not a whole lot of money to tax, especially if you have children.

When I filed last year, which is the first year of my doing childcare, I did not owe any taxes and like I said I kept more children than what you are keeping. I also have 4 children of my own though so that may have had an impact of the taxes I would owe.

I honestly do not understand it when people say that they dont want to claim the money they have earned to the IRS for childcare. I really just dont think that is being fair to the parents of the children you are watching. When I worked, that childcare credit was a huge help to me.

[Minnymouth]

Ok, you want to use this deduction in your bankruptcy case, but do not want to pay taxes on it thru the IRS.

WELL, the rest of us don't like paying taxes EITHER...... but if you make over $600.00 in income from a side job - babysitting, housecleaning, yard work, etc... - you are expected to pay taxes on it.... It becomes part of your yearly income.

Yes this will be discovered by the Trustee and then the IRS will also get involved and want to know WHY you have not claimed it.....

If you do nothing - it could cause your case to be dismissed....

So best, do the right thing, protect all your interest, and more then likely it will not affect your Income taxes at all.... (It's not like your making millions on the side that your not claiming)....



Let us know what you do.....

[JusticeForAll]

Further........

By law the Mom is supposed to send you a 1099 if she pays you more than $600 in any given year. She might not know that. However, if she can get some kind of tax break for the money spent on child care, she will! In order for her to claim it, she'll have to 1099 you and then you'll be busted! Trust me, you don't want to pay the fines and penalties the IRS will impose on you for fraudulent filing.

They charged me a $400 penalty about two years ago for filing my return one month late.

[confusedinVA]

My apologies to monlyba I have to jump in and ask a question here.

Justiceforall---Last year, I did not recieve any 1099's from any of the parents. Is this something I should tell them about this year? Are they going to be penalized for not giving me a 1099? I asked them all if they had any problems with their taxes and if they needed anything further from me. They all said no, some even got a refund. What do I do? When I filed my taxes, and yes, I did claim every penny, I was never asked about 1099's. Is this something I am supposed to have copies of and file them as well?

Thanks in advance and my apologies again to the op. But perhaps this is a question you would have asked as well?

[Minnymouth]

Yes, they should have supplied you with a 1099....... all outside work over $600.00 should have a 1099 issued for it.....

Some parents don't because they don't know, some don't show the caregiving payments on their taxes. Some do.

If you have given this parent your SS#, then yes they have claimed it without giving you a 1099. And thus it would show up as you making income off of them.

It was best that you did claim the income, that way you have protected yourself with the IRS. And yes, they can be questioned about this issue also thru the IRS.

Keep good records of your babysitting..... protect your own interest regarding your tax issues.

The other people may or may not be claiming the expenses for you on their taxes. They just may be taking the "child credit" and letting it go at that.

[JusticeForAll]

Yup! What Minnymouth said! She's got it!

[Minnymouth]

THANK YOU, THANK YOU!!! (bowing)...... LOL

Have done a lot of income tax papers for folks over the years, its a sideline of mine......

[monlyba]

ok, i know you guys are right. i guess mostly i was just thinking i might owe taxes but i wasn't considering deductions and all that. plus i do have a child so that would help i'm sure. i've never heard of parents having to send a 1099 either - interesting. i certainly have no issue with her wanting to get credit for it on her taxes. i helped a friend file her taxes a few years ago using TurboTax online and it just asked if she pays for childcare and we chose yes and then it asked how much and the name/ssn of the person who cared for her child. how do you even go about sending a 1099 to someone? i would bet hardly anyone who has their children in a home childcare environment knows about that. anyway, so i'll do everything legit. you're right that it's not a lot of money so it's not worth fudging the details. thanks for all your advice!

[SinkingFast]

We used a neighborhood lady to care for our kids when I would temp. At the end of the year, she gave us a statement of when she cared for the kids and how much we'd paid.

Her statements were printouts from her Excel program printed on her business letterhead.

This gal had a State Certed Childcare Business which she ran out of her home. She did her own taxes and filed quarterly on her business.

We never gave her a 1099 of what we paid her.

Maybe the rules on that vary from State to State about how it's supposed to be done.

Either way, Monly, you should claim the income and file taxes accordingly.