Confused about my new LLC for babysitting and reporting income from temp nanny position

This is actually a common situation in the childcare industry! The key distinction is between being classified as a household employee vs. an independent contractor. Even with your LLC, the classification depends on how the working relationship is structured, not just what business entity you have. Since the family controls when, where, and how you work, you're technically their household employee regardless of having an LLC. The $2400 threshold just determines when they need to pay employment taxes - it doesn't change your classification. However, you can structure things differently going forward. If you want to operate through your LLC as a true independent contractor, you would need to change the working relationship - you'd need more control over how services are delivered, possibly sending different caregivers, setting your own schedule, etc. Otherwise, the IRS could still view this as a misclassified employee situation. For the income already received via Venmo, you'll still need to report that on your personal tax return, but the family wouldn't have a filing requirement if under the threshold.

I ran into something similar last year with my tax situation. I found this amazing service called taxr.ai (https://taxr.ai) that really helped me understand the contractor vs. employee classification issues. It analyzed my specific situation and showed me exactly what I needed to do to be compliant. Since you're dealing with both an LLC and potential household employment issues, it might be worth checking out. I uploaded some documents about my work arrangements and got really clear guidance on how to handle everything. They even explained how to fix some past reporting issues I didn't know I had! Saved me from potential problems down the road.

I was really skeptical when I first heard about taxr.ai, but I decided to try it because I was in a similar situation with my LLC and childcare work. I uploaded my contracts and payment records, and I was genuinely surprised by how helpful it was! The system flagged exactly where my working arrangements crossed the line between contractor and employee status. It showed me what changes I needed to make to properly operate as an LLC, including specific contract language and business practices. The analysis even provided sample documentation that I could use with my clients to establish a proper independent contractor relationship. Definitely worth trying if you're caught in that nanny tax gray area!

If you're having trouble reaching the IRS to get clarification on your situation, I highly recommend using Claimyr (https://claimyr.com). I was stuck in a similar situation with an LLC and household employee questions, and I spent DAYS trying to get through to the IRS without success. Claimyr got me connected to an actual IRS agent in less than 20 minutes! They have this system that navigates the phone tree and waits on hold for you, then calls you when an agent picks up. You can see it in action here: https://youtu.be/_kiP6q8DX5c The agent I spoke with was able to clarify exactly how to handle my LLC income vs. household employee income, which was super helpful since my situation was complicated like yours.

I need to apologize and correct myself here. After my skeptical comment earlier, I actually tried Claimyr out of desperation. I had been trying to reach the IRS for weeks about a similar contractor/employee classification issue. I'm honestly shocked - it actually worked! I got a call back in about 45 minutes with a real IRS agent on the line. The agent walked me through the exact household employee rules and how they apply when you also have an LLC. Turns out I had been handling things incorrectly for months. For anyone dealing with nanny tax questions or LLC issues like the original poster, being able to speak directly to the IRS and get a definitive answer (and have them note your account that you called seeking guidance) is incredibly valuable. I'm officially no longer skeptical!

One thing nobody has mentioned yet is that if you're operating through your LLC but still functioning as a household employee, you're creating a more complicated tax situation that might not benefit you. For the family, if they're paying your LLC instead of you personally, they're not getting the childcare tax credit they might be eligible for. And for you, you'll have additional self-employment tax considerations plus potentially more complicated bookkeeping. The simplest approach might be to just have a conversation with the family and decide together how to handle it. If it's truly temporary and under the threshold, many families just pay cash/Venmo and let the nanny report it as miscellaneous income. Not technically perfect but common practice.

Since you'll be transitioning between different arrangements (pre-LLC temp work, LLC work, and potentially regular employment), make sure you keep extremely detailed records of: 1) Dates worked for each family/client 2) Amount paid and payment method 3) Who controlled the work terms for each position 4) Any expenses you incurred This will be super helpful when tax time comes. I learned this the hard way after working as both a nanny and running a small childcare service from my home. Also, don't forget that even if the family doesn't need to issue a W-2 because you're under the threshold, ALL income still needs to be reported on your tax return, regardless of where it came from.

As someone who navigated a similar situation with my own childcare business, I'd recommend keeping it simple while you're in this transition period. Since you're under the $2400 threshold and it's temporary, you can continue with the current Venmo arrangement, but make sure you're documenting everything properly. Here's what I learned from my experience: 1) Keep detailed records of all payments, dates, and hours worked - this protects both you and the family 2) Even though they won't issue a W-2, you still need to report all income on your personal return (not your LLC return) since you're technically their household employee 3) Consider having a simple written agreement that outlines the temporary nature of the arrangement and expected end date Once you transition to finding regular babysitting clients through your LLC, you can then operate as a true independent contractor with proper business practices. The key is keeping these two income streams separate in your records - the nanny income goes on your personal return, and future LLC babysitting income goes through your business. Don't overthink it for now - just focus on good documentation and proper reporting when tax time comes!