My wife babysits at our home and makes 250.00 dollars a week doing this. how much do we need to set aside for taxes? And is this money that we need to pay out to the government, or will they simply deduct it from our refund?
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ANSWERS: 3
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Not knowing the houshold income, I would hold out 25% and put it into a savings account for tax time. That way you know you have the money in case you end up owing. Better to be safe than sorry.
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If you are filing separately, the government will want estimated taxes paid quarterly, and there could be penalties for not doing so. If filing jointly, and her babysitting salary is relatively small compared to your salary, there may be no penalties. I think you have to pay the government something like 80% of your taxes on salaries during the year. If filing jointly, and you meet that percentage withheld, then you do not need to send the government any money; they will combine your earnings, compare it against what was withheld from the non-babysitting job, and you'll either get a refund or send in a check (for the joint return).
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what care do you provide while you are babysitting? because you can also on you tax's use this as a tax write off so talk a person who does your tax's. for example: 1 room phone food toys DVD if kids watch them so you can see you really need to talk to some one as this may actual get you money instead of cost you money. I stand corrected here is more inforamtion: This is a business activity and the income is subject to both Self-Employment tax at 15.3% of the net profit as well as income taxes as ordinary income. You'd file Schedule C-EZ with your Form 1040 return to figure your net income. Then you'd attach Schedule SE to calculate the Self-Employment tax. Furthermore if you expect to owe more than $1,000 for the year -- you'd hit that in SE tax alone at about $6,500 in net income -- you must make quarterly estimated income tax payments using Form 1040-ES. www.bankrate.com/brm/itax/tips/20010308a.asp www.irs.gov/businesses/small/article/0,,id=117613,00.html
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