Hi! I did not officially work a "real" job this year. I earned about $4000 this year by babysitting, running errands... things like that. Can I use "household employee earnings" category for earned income when filing my taxes. If I can then I can claim my daughter in order to get child tax credits... Is this OK? There are no W2's involved or anyone putting me on their payroll. Thanks in advance! :)

If you claim this income on your taxes, you will be liable to pay social security taxes on your earnings. Also, if any of your "cients" paid you more than $50/quarter, they are liable for paying SS as well. So you raise an issue that may cause you (and your clients) a lot of grief!

If Jenpen cared for the children in her house or apartment, then the $50/quarter rule for FICA (Social Security and Medicare) taxes would not apply, as she would be considered an independent contractor.

She would have to file Schedules C and SE with a Form 1040, but no income tax would be due to the income level, and the self-employment tax will definitely be offset by the Child Tax Credit and the Earned Income Credit she would receive.

However, if she is on ANY type of public assistance or welfare, those payments may be reduced as a result of her filing this return.

If she is willing to take that chance, or if she has more details to add, she can post them or email them to me at [email protected].

Thanks for your help ATE! Yes, I do get medi-cal for insurance ( I really hope something is done about private insurance groups, because of pre-existing conditions they want $725 per month!! Crazy!) I'm still considered "under the poverty" line, so I don't think that it will change? I was using "Free Tax Usa" online to file, not sure if I can do the Schedule C and SE, but I will check. Thanks again :)

Jenpen:

If they will NOT do the Schedules C and SE, drop me an email at [email protected] and I should be able to give you a hand.