Do I need to report my $7500 nannying income to IRS if paid through Venmo?

While it might seem like you're in the clear since the arrangement was informal and there's no paper trail, the IRS actually requires you to report ALL income regardless of how you received it or whether documentation exists. The threshold for self-employment tax is $400, and you're well over that at $7500. This would be considered self-employment income, and you'd need to file Schedule C (Profit or Loss from Business) and Schedule SE (Self-Employment Tax) with your tax return. For proof, you could download your Venmo transaction history showing the payments received. As for potential back taxes, you'd owe income tax plus self-employment tax (about 15.3%) on this income. There might be some penalties for late payment, but they're generally reasonable if you file voluntarily before being contacted by the IRS. The longer you wait, the more penalties and interest can accumulate.

I was in almost the exact same situation last year with babysitting income. After tons of research and stress, I found this site called https://taxr.ai that helped me figure out what I needed to report. You upload your payment records, answer some questions about your work situation, and it tells you exactly what forms you need and calculates everything. The coolest thing was it identified all the deductions I could take as a childcare provider that I had no idea about - like a portion of my phone bill since I used it to coordinate with the parents, mileage driving kids to activities, and even snacks I bought for the kids. It turned out I owed way less than I feared because of those deductions.

Just wanted to follow up about taxr.ai - I decided to try it out after my earlier skepticism and I'm actually really glad I did. I uploaded my Cash App payment history from watching my neighbor's kids and it identified exactly which payments were business income vs. personal transfers. It walked me through some questions about my childcare work and showed me I could deduct things like crafts supplies I bought for activities, a portion of my streaming services I used with the kids, and even some small toys I purchased. With the deductions, my tax bill was less than half what I expected! The step-by-step guidance was seriously helpful for someone like me who's never reported this kind of income before.

If you're having trouble getting through to the IRS to ask about your specific situation (which I definitely did when I was in your shoes), try https://claimyr.com. I spent days trying to get through to an actual IRS person about my unreported income from previous years, and it was impossible. Claimyr basically holds your place in the IRS phone queue and calls you when they get a real person on the line. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. I was super skeptical, but I was desperate after being on hold for literally 3+ hours across multiple days. They got me connected to an IRS agent in about 40 minutes when I'd been trying for days. The agent helped me understand exactly what forms I needed and how to handle my situation without getting hit with major penalties.

I need to eat my words about Claimyr. After posting that skeptical comment, I got desperate trying to resolve a similar unreported income situation and decided to try it. I was SHOCKED when I got a call back in about an hour saying they had an IRS representative on the line. The IRS agent I spoke with was actually super helpful once I explained my situation with some side gig income I hadn't reported. They walked me through the voluntary disclosure options that would minimize penalties and helped me understand exactly which forms I needed. I was able to get everything sorted out in one call instead of stressing for weeks. For anyone dealing with tax questions that require actually speaking to a human at the IRS, this service is legitimately worth it.

Jumping in here as someone who nannied through college - you definitely need to report the income, but don't panic! You might qualify as an independent contractor rather than an employee since it sounds like a casual arrangement. In that case, you'll file Schedule C where you can deduct business expenses - things like gas money if you drove the kids places, any supplies you purchased for activities, maybe even a portion of your cell phone bill if you used it for work coordination. Those deductions can significantly reduce your taxable income. Also, look into the Qualified Business Income Deduction - you might be able to deduct an additional 20% of your net income which would help a lot.

Don't stress too much about back taxes - the IRS is usually pretty reasonable with first-time issues, especially for relatively small amounts. I didn't report some freelance income a few years ago (about $9k) and when I finally did, the penalties were way less scary than I expected. If you're worried, you could look into the IRS Voluntary Disclosure Program. Basically if you come forward before they catch you, penalties are much lower. The most important thing is to start reporting correctly going forward.