A Guide for Nannies Picking Up Side Jobs
Babysitting is an essential service for parents who want to go on a date, attend a child-free event, or simply have some time to recharge. However, when tax season arrives, many caregivers wonder whether they need to pay taxes on those earnings. The answer depends on how much money changed hands and whether the temporary work meets the guidelines for self-employment.
We all know that traditional nanny positions should be W-2 positions based on the control the family has over the working relationship. However, suppose you’re picking up one or more occasional babysitting jobs from other families who are not exerting the same level of control. In that case, your earnings from those jobs may be considered self-employment income.
If you’re taking on babysitting jobs as a side hustle, understanding tax obligations is crucial to avoiding penalties and ensuring compliance with IRS regulations. Below, we break down the key tax rules you need to know.
Do Babysitters Have to Report Their Income?
Yes! According to the IRS, if you earned $400 or more from babysitting in a year, you must report this income when filing your taxes. While families hiring an occasional babysitter don’t always have to provide a tax form, you are still required to report all income received.
Some families may issue a Form 1099 if you earned more than $600. However, even if you don’t receive this form, you are still responsible for reporting and paying taxes on your earnings.
What Taxes Do Babysitters Need to Pay?
The amount of taxes you owe depends on how much you earn. Generally, babysitters must pay self-employment taxes if they earn $400 or more. This includes:
- Social Security tax (12.4%)
- Medicare tax (2.9%)
If your total income is above the IRS filing threshold ($14,600 for single filers in 2024), you may also owe income tax in addition to self-employment tax.
Are Babysitters Considered Household Employees?
In some cases, babysitters may be classified as household employees instead of independent contractors. This happens when a family directly controls how you perform your job (e.g., setting your hours and providing regular work).
If you were paid $2,700 or more in 2024 from a single family, they may be required to:
- Withhold and pay employment taxes on your behalf.
- Pay employer taxes on these wages.
Additionally, families may have unemployment tax obligations when as little as $500–$1,100 in wages is paid to an employee, depending on the state.
Do Babysitters Need to File Taxes?
If you earned at least $400 in net self-employment income or $14,600 in total taxable income (if filing as a single adult), you are required to file a tax return. If you’re claimed as a dependent, different income thresholds apply, so be sure to check the IRS guidelines.
While filing taxes might not be fun, it has benefits! You’ll be contributing to Social Security and Medicare, which allows you to draw benefits later.
Which Tax Forms Will Babysitters Receive?
Depending on your classification, you may receive different tax forms:
- Form 1099 – Issued if you’re an independent contractor earning $600+ from a family.
- Form W-2 – Issued if you’re a household employee and taxes were withheld from your pay.
If you receive a 1099 or need to report income you didn’t receive a 1099 for, you’ll need to include the following forms with your tax return:
- Form 1040, Schedule C – Used to report self-employment income if you’re classified as an independent contractor.
- Form 1040, Schedule SE – Used to calculate Social Security and Medicare taxes if self-employed.
How to Pay Estimated Taxes on Babysitting Income
If you expect to owe more than $1,000 in taxes, the IRS requires you to make estimated payments quarterly to avoid penalties. Estimated tax payments are due in April, June, September, and January (of the following year).
Final Thoughts
Babysitting can be a great way to earn extra income, but it’s important to understand your tax responsibilities. Staying informed about tax rules can help you avoid surprises at tax time. If you have additional questions, consider consulting a tax professional who can help assess your total tax responsibilities.