Originally Posted by daycarediva:
He did say that she watches children in her home, not the parent's.
She needs to amend her return immediately. How on earth could she claim you as her employer without a EIN/TIN and a W-2?
We ARE taxed on our income, we pay self employment tax.
Direct her to Tom's blog, or here. I would just tell her politely that she is running a daycare (hopefully not illegal) and is considered an independent contractor for tax purposes. Nannies are employees.
My previous posts may be confusing. In the situation where the parent brings her child to the home of the caregiver, the parent is not the employer of the caregiver and the caregiver is self employed. The caregiver must report all her income. The parent owes nothing regarding Social Security taxes to the caregiver.