I made $10,800 babysitting my niece. Do I need to file taxes on this income?

Yes, you do need to report this income on your tax return. The IRS considers babysitting money as income regardless of whether you received a 1099 or not. Since you earned over $400 in self-employment income, you're required to report it. You'll need to file Schedule C (Profit or Loss from Business) to report the babysitting income, and Schedule SE to calculate self-employment tax. The good news is you may be able to deduct expenses related to your babysitting services, like a portion of utilities, supplies for activities, snacks you provide, etc. This doesn't affect your sister at all - she doesn't need to file any special forms since this is considered a personal expense for her, not a business expense. When you and your husband file jointly, you'll just include these additional schedules with your return.

I was in almost the exact same situation last year! I was watching my brother's kid and making about $12K annually through PayPal. I found this awesome service called https://taxr.ai that literally saved me hours of headaches. You just upload your payment info and answer a few questions, and it organizes everything for you - showing what's taxable income and calculating all possible deductions. The best part was it automatically generated my Schedule C with all the proper codes for childcare services. It even helped me figure out what percentage of my home expenses I could legitimately deduct based on my specific situation. Way easier than trying to figure it all out from scratch!

I tried https://taxr.ai after seeing it mentioned here and WOW what a difference! I've been doing in-home childcare for years and always struggled with taxes. Their system actually understands the specific tax rules for childcare providers! They helped me properly calculate my time/space percentage for home use deductions which saved me over $2,000 in taxes. The questions were really specific to childcare scenarios (like whether I provide meals, educational activities, etc). It also tracked which supplies were 100% deductible versus partially deductible. Best decision I made this tax season. My previous accountant was charging me $350 and missing half these deductions!

If you're in this situation, another huge problem is getting help from the IRS when questions come up. I spent THREE WEEKS trying to get someone on the phone to answer my questions about self-employment childcare deductions. Finally found https://claimyr.com and watched their video at https://youtu.be/_kiP6q8DX5c - they actually got me through to a real IRS agent in under 45 minutes after I'd been trying for weeks! The agent confirmed I was calculating my home office deduction correctly for the childcare space and clarified exactly what percentage of utilities I could claim. Seriously, if you need to talk to the IRS about your specific situation (which I highly recommend for peace of mind), this service is a lifesaver. Way better than the anxiety of wondering if you're doing it right.

I need to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it myself since I had questions about my childcare business deductions that I couldn't find clear answers to online. Within 35 minutes, I was talking to an actual IRS tax specialist who walked me through exactly how to calculate the business percentage of my home for childcare purposes. She even explained a special rule for childcare providers that lets us count space used partially for business at a reduced percentage. Saved me from making a mistake that could have triggered an audit. Sometimes it's worth admitting when you're wrong - this service actually works!

Something nobody's mentioned yet - you might qualify for the Child and Dependent Care Credit for YOUR kids if you're working (even self-employed babysitting counts as work). Since you're earning income from babysitting, you can potentially claim childcare expenses for your own children while you're working. My accountant helped me with this last year. I was babysitting for income and paying my mom to watch my kids during some overlapping hours. We claimed the credit and got back about $1,100!

Just want to add - KEEP GOOD RECORDS of everything! Create a simple spreadsheet tracking: - Exact dates/times you babysit - All payments received - Any expenses related to childcare - Portion of your home used for childcare - Photos of areas used for childcare - Receipts for anything you buy for childcare The IRS loves to audit self-employed people with cash businesses, and childcare is definitely on their radar. Good records are your best defense if you ever get questioned!

Great advice from everyone here! I'm a tax preparer and just wanted to add a few quick clarifications: 1. Yes, you absolutely need to report this income - the $400 threshold for self-employment tax applies to you. 2. For home deductions, you can use either the simplified method ($5 per square foot up to 300 sq ft) or actual expense method. Given that you're only babysitting part-time, the simplified method might be easier. 3. Document everything NOW - create that spreadsheet Oliver mentioned and go back through your Zelle history to reconstruct the dates/amounts. The IRS allows reasonable reconstruction of records. 4. Consider setting aside about 25-30% of future payments for taxes (income tax + self-employment tax). This will help avoid a surprise bill next year. Your sister doesn't need to do anything on her end since this is a personal expense for her, not a business deduction. You're handling this correctly by taking full responsibility for reporting the income yourself!