Why You Must Pay Taxes

• As a babysitter, Uncle Sam considers you to be self-employed. The Internal Revenue Service (IRS) requires all individuals to pay taxes on any money they earn through their self-employment. Failure to pay taxes on your babysitting earnings could result in a penalty from the IRS.
  
  

What You Must Pay

• When you're babysitting the neighborhood children, there's no one to hand you a W-4 and withhold income taxes from your pay. Therefore, you will need to make estimated tax payments to the IRS. In addition to regular income taxes, any money you make above $400 in a given tax year is subject to a self-employment tax for Social Security and Medicare. This amount of the tax depends on your earnings and can change from year to year, but you can find the amount for the year in which you're paying taxes on Schedule SE of Form 1040.
  
  

How to Pay

• To find out how much you should be paying Uncle Sam, you'll first have to determine your expected adjusted gross income and any deductions and credits you qualify for. Form 1040-ES, available from the IRS website, helps you calculate how much you should make in estimated tax payments. You can make estimated tax payments to the IRS by submitting Form 1040-ES, along with payment, to the IRS, or you can pay electronically at the EFTPS website. Estimated tax payments are due to the IRS four times a year.
  
  

Getting a Return

• Like any other wage earner, you will have to file a tax return each year. Depending on how much you sent Uncle Sam throughout the year in estimated taxes, you may be entitled to a refund or you may find yourself having to pay the IRS additional money. The good news is that many online and standalone programs make filing a tax return a relatively easy and fast task, so you can get back to your babysitting gigs.