I just started watching 3 kids to make extra cash? do I and how do I take care of the taxes?

Question

i don't know if the parents plan on claiming a child care credit with their taxes--and I'm worried if they do, what am I going to have to provide them with, and how do I put cash aside to pay my taxes?

Answer 1

You may be wise to fill out form SS-4 and get a Federal Employer Identification Number (FEIN).  This way you do not have to give out your social security number.  (go to www.irs.gov - the link is on the left hand of the page)

To get the child care credit you will have to give them your social security number or your FEIN, your address and the dollar amount they gave you.

Since you are opening up your own small business, you should get the following publications from the IRS.  You can get them online at www.irs. gov or call 1=800-TAX-FORM.

The instructions for Schedule C on the 1040 form

Publication 463 Travel, Entertainment, Gift, and Car Expenses.

Publication 505 Tax Withholding and Estimate Tax

Publication 583 Starting a Business and Keeping Records

Publication 587 Business Use of your Home

Answer 2

Get a receipt booklet and when they pay you, fill out a receipt and sign it. Get one with carbon copies and give them the receipt and you keep the copy.That way you can keep track of how much they paid you.

My aunt has ran a home daycare for years and she uses her computer to keep track of her parents payments. Then she gives her parents a print out at the end of the year.  There are programs for keeping track of payments. But a recipt booklet is cheaper.

Whether they file or not you have to report your earnings.

As far as putting cash back, talk to your bank and see if they have an account that will not allow you to withdrawl for a certain time period.  Sort of like a christmas club account but lets you withdrawl at tax time instead.

But make sure you deposit money in it. Don't think," well I need such and such and if I put this money in the bank I won't be able to get it". This way you won't be able to spend it on other things and maybe even be able to earn intrest on it.

Answer 3

Whether they claim it or not, you are legally required to report the income and pay tax on it.  Keep records of the income and any associated expenses.  You'll file a form 1040, a schedule C, and a schedule SE.  You should also make quarterly estimated payments using form 1040ES for federal, and probably quarterly state payments also.

Answer 4

Go to IRS.GOV and order up a free Publication 15.  It will cover what you have to do and how to do it.  Get a receipt book and receipt all money collected.  Keep a written records of all business related expenses.  As a self employed person you have to fill out a Sch C and if you make a profit a Sch SE for the FICA tax.  If you are using your home for a daycare you can deduct a portion of all home related expenses for the business on a form 8829.  If you want any clarification or answers to specific questions ask me.  37 years income tax preparation & VITA rep.