Dependent Care Savings Account Tax Help Needed?
Dependent Care Savings Account Tax Help Needed?
I have been using a Dependent Care Savings Account to pay for in-home day care for my children. Do I have to give my babysitter a W-2 at the end of the year? Am I responsible for paying Social Security Taxes for the wages I have paid her?
Answers:
Chosen Answer
Mathew: At least you must give that person a 1099 Misc. The issue of paying SS and Medicare is avoided if that arrangement is acceptable to her. You must have a way to show your employer that you had the expense and must use all of the money that you placed in the DCSA by the end of the year.
2006-12-21 15:41:13
Mathew: At least you must give that person a 1099 Misc. The issue of paying SS and Medicare is avoided if that arrangement is acceptable to her. You must have a way to show your employer that you had the expense and must use all of the money that you placed in the DCSA by the end of the year.
2006-12-21 15:41:13
Judy: Technically, you probably are. An in-house babysitter would rarely qualify with the IRS definition of an independent contractor. If she agrees, you might get away with giving her a 1099. If she's not expecting to pay taxes on her earnings, expect her to be pretty unhappy in either case, although not paying taxes would be breaking the law.
2006-12-21 17:35:21
2006-12-21 17:35:21
kgbbsc7: Assuming she is employed by you (and she isn 't like a daycare provider for other children). Then you need to be withholding taxes from her. Might want to see a CPA
2006-12-21 18:41:05
2006-12-21 18:41:05