Legal Question in Tax Law in California

showing income for child care services provided to family members

Hello,

This fall, my wife may be providing child care for two of my nephews. She will be charging the parents a monthly fee, so we wanted to know if that is considered taxable

income.

What publication(S) would I view to find out this information?

We had heard that you do not need to show income provided

by family members for child care? Is this correct?

Thanks for the assistance


Asked on 7/30/07, 4:18 pm

1 Answer from Attorneys
Jeb Burton The Burton Law Firm

Re: showing income for child care services provided to family members

Your wife needs to report her income on these services, unless of course she falls below federal tax reporting exemptions (nothing to do with family employees or child care). I don't know who told you her income was exempt, but almost definitely they are incorrect. You need to speak with your CPA, but most likely your wife will be defined as an independent contractor and need to file quarterly reports with the IRS (depending on how much she is making).

There are family employee rules (unrelated to child care) but they most likely do not apply here. And even if they did... she would still need to report her income.

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Answered on 7/30/07, 7:28 pm


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