Babysitting Taxes: The Information Parents Need to Know

Over the past few weeks, we’ve answered a lot of questions about the employment classification of part-time nannies and occasional babysitters and whether or not they have access to government benefits like unemployment. The answers are actually quite straightforward. 

All nannies and babysitters are domestic workers (not independent contractors), and if a family pays a nanny or caregiver over a certain amount in a calendar year or a calendar quarter, there is a tax responsibility for both parties. There are casual babysitting exemptions, but it all comes down to the numbers.

What if I hire my babysitter occasionally?

While full-time nanny positions are more often paid through a payroll service, there is a lot of confusion right now about more casual babysitting positions that don’t come with an employment contract due to the occasional or flexible nature of the positions and how they develop and change over time.

Can these part-time babysitters or nannies file for unemployment?

The answer is yes, and if you’ve paid more than $600 in the first quarter of 2020, or more than $2,100 in 2019, you may be approached by the IRS to address taxes associated with the employment of your nanny or babysitter. 

What should I do if I didn't withhold taxes for my occasional babysitter or part-time nanny?

If you find yourself in this position, we recommend connecting with our partners at Homepay. They will help you calculate the payments you’ve made to your babysitter or nanny and determine how to best move forward. This could mean amending your 2019 return if you’ve already filed it and requesting penalty forgiveness for late filings. If you began employing your caregiver in 2020, you have not missed as many deadlines and can more easily remedy the situation and satisfy your tax obligations. 

Either way, there is a path forward. Some families are also choosing to continue compensating their part-time employees through New York on PAUSE with plans to resume working together in person (while personally maintaining social distancing practices) in the coming weeks.

If you are unable to continue working with your babysitter or nanny through New York on PAUSE, your caregiver will most likely need to apply for government assistance. When they file for their benefits, they will be asked to provide their previous employers. Even if you didn’t previously withhold taxes, your nanny or babysitter can list you as an employer. 

SmartSitting has helped many families and babysitters understand legal employment for part-time child care workers and is happy to chat with any family or babysitter looking to understand their options right now. Please feel free to reach out to us!