Household Employee or Not?

[jackie310]

Client's aunt lived with them free of charge in return for low cost baby sitting. About $4200 is indicated in Box 10 of their W2 for dependent care, which was amount paid to aunt. Do they have to consider their aunt as a Household Employee?

[IRonMaN]

Hiring household employees | Internal Revenue Service (irs.gov)

[qbteachmt]

I find the question a bit confusing. If they already issued a W2, yes, they treated the person as a household employee. But box 10 is for a (potentially) taxable benefit received for the care of the W2 recipient's dependent. It's not for doing the work, but for incurring the cost that an employer then offset with a fringe benefit payment amount. Box 1 is where income paid to the W2 recipient would be listed, and not also Box 10 if the W2 recipient is not the box 10 beneficiary and isn't the one incurring the expense of care.

[qbteachmt]

Oh, wait, let me try again:

Your taxpayer client, who is not the aunt, has a W2 with a care benefit on it, and their cost is incurred because they paid the aunt to provide the care?

Sheesh. Pronouns are hard.

[George4Tacks]

Is Sheesh a pronoun? I am having trouble keeping up with all the various flavors of pronoun!

[qbteachmt]

My mother tends to overuse pronouns, and then I have to stop and ask for perspective. She said something to her about something she did earlier in the week? Okay. Target, meet object.

[Terry53029]

Answer to your question is yes. You must fill out 1040 schedule H. Here is a link for IRS instructions.

https://www.irs.gov/taxtopics/tc756