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If a person is paid by the state as sitter on a 1099 is that

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person liable for gross receipt...
If a person is paid by the state as sitter on a 1099 is that person liable for gross receipt tax. They file a schedule c in order to pay self employment tax but are not really self employed
JA: Thanks. Can you give me any more details about your issue?
Customer: Person gets about 7000 a year from nm to care for kids. As I said state sends her a 1099 with no taxes withheld is she liable for gross receipt tax
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Submitted: 1 year ago.Category: Tax
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Answered in 54 minutes by:
3/23/2016
Tax Professional: Anne, Master Tax Preparer replied 1 year ago
Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2,439
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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Hi

I'm Anne. I've been preparing taxes for 27 years and I'll be happy to help you.

If this person watched the children in her home, then according to the state, she is Self Employed. This is especially true if she watches children from more than 1 family.

She may, however, deduct her expenses that she incurred while watching the children. This would include food, paper products, games/books, outings, "equipment" such as high chairs, baby swing, play pen, etc.

If she's licensed through the state, then she can write off a % of her utilities, repairs on her home, improvements such as fencing, etc and she can depreciate a % of her cost basis of her home.

The only other option that would make her an employee as opposed to self employed is if she watched the children in THEIR home. If this is the case, then the people who hired her to be their private "nanny" (as it's called) need to issue her a W2.

If you have further questions, please post them here & I'll be notified.

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Customer reply replied 1 year ago
The answer was of no help. That is basic schedule c. I needed to know about gross receipts
Tax Professional: Anne, Master Tax Preparer replied 1 year ago

Gross receipts are the total income she receives from the state plus any $ amount that parents who pay her directly.

Gross receipts are before expenses. There is not a "gross receipts" tax. She will however, have to pay her own Social Security tax (Form SE) on her NET income, which is gross income less her expenses.

I hope this helps,

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Customer reply replied 1 year ago
In nm gross receipt tax is money you charge customer usually 7% on the dollar for resale goods , but I don't know if it is for services like babysitting since she doesn't get pd by the people but the state
Tax Professional: Anne, Master Tax Preparer replied 1 year ago

No, her business doesn't work like you describe. She's selling a service, which doesn't require any tax on the GROSS.

All of her taxes are calculated on her NET income, after all of her deductions. Since she is self employed, she will need to pay 15% (again on her net income) into her Social Security tax, (Form SE) .

I hope this helps

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Tax Professional: Anne, Master Tax Preparer replied 1 year ago

I was just checking back with you to see if you had any further questions or needed any additional information.

If not, then please take the moment to rate positive by clicking on the stars so that I may be credited with helping you.

Thank you again for choosing justanswer.

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