Any thoughts on these types of arrangements? I know they are common for babysitting and other odd jobs, especially for young people. Legally speaking, I know these types of income are supposed to be reported, but it’s also not regularly enforced (I know I never got a tax form at the end of the year from the families I babysat for as a teen!)
Most teenage babysitters don’t earn enough from one family for the family to have to issue them a 1099 form.
So where would you/do you draw the line? Every last cent needs to be reported? Is it different if it’s a kid, teen or adult? Type of work? Under a certain amount is “no big deal”?
If you are the one employing the help, then just follow the income rules. If the income you give the person in a year is under $600, a 1099 is not necessary. The IRS doesn’t make a distinction between age groups. If you are employing someone for more than $1900 per year, you also are obligated to pay social security taxes for the person and deduct the appropriate amount of social security taxes for their part of the tax.
Now, if the person has his/her own business (meaning the person has registered their business with the state), then you don’t have to issue any paperwork for them. It’s up to them to do any reporting. If the person is doing babysitting “on the side” and hasn’t established a formal business, then yes, you should follow the rules above, even if the person is babysitting in their own house and not in yours.
Now if you ask a relative or friend to do something for you and no payment discussion has taken place ahead of time and you just give them some money, I would consider that a gift.
Also, if it is sinful, is it considered grave matter? After all, not reporting income is considered by some to be stealing from the government. Curious to know your thoughts on this widespread practice.
It would be considered sinful to cheat the government or not pay social security for them when required. Ask a priest if it’s grave matter or not. I don’t think any of us can tell you that for sure.
Now, if you an adult being paid “under the table” as you call it, then you are obligated to report all of your income, unless you haven’t earned enough total income to file a tax return at all. A dependent child who has no unearned income (like interest) does not have to file a tax return to report earned income if it is less than $6,100.
Of course, sometimes these things aren’t really earnings but “gifts” also. Let’s say a friend wants me to watch her dog and house while she is gone. I do it out of friendship but then when she comes back she insists on giving me a little cash. This would be a gift, not income.