Another Teen and Taxes Question!

[Unregistered]

If my teen daughter was to care for a few children in our home during the summer months she would be considered an independent contractor/business owner, correct? I understand she would have to pay self-employment taxes.

My question is - what deductions could she take to offset those self-employment taxes? She does not own the home, I do, so I figure she can't really deduct anything other than maybe supplies and food if she pays for those herself.

[TomCopeland]

teen daughter working in home

If my teen daughter was to care for a few children in our home during the summer months she would be considered an independent contractor/business owner, correct? I understand she would have to pay self-employment taxes.

My question is - what deductions could she take to offset those self-employment taxes? She does not own the home, I do, so I figure she can't really deduct anything other than maybe supplies and food if she pays for those herself.

First, you need to check to see if she is in compliance with child care licensing rules. In some states, children of providers must meet all licensing rules to care for children. Assuming she can legally do this, then she should report her income on Schedule C as a sole proprietor. She can only claim expenses she directly pays for: food, supplies, etc. as well as car mileage if she drives for business purposes.