<p>If a college-bound student is self employed, such as a babysitter, and doesn't report any income to the IRS,
she will have no income to reduce her college aid package,
but she will want to tell the admissions office she is a responsible person with a babysitting business so they accept her into the school.</p>
<p>Will the admissions office and financial aid office check with each other and discover she should have been reporting her income?</p>
<p>I wouldn’t think a typical high school student’s babysitting income would be reported on the FAFSA. BUT if your daughter is a full time nanny, for example, that WOULD be reported income…and the family hiring her would need to also be dealing with this IF the income earned was in excess of a certain amount.</p>
<p>No they don’t need to file IRS taxes with an income of less than $5700 but they DO Need to list their income on the FAFSA/Profile. BUT I would not think babysitting or shoveling snow would be listed unless it is regular employment.</p>
<p>Dependent students have a $5250 income protection allowance according to the EFC Formula Guide for 2011-2012, meaning that unless the student makes more than $5250 during the year, their income will not affect their EFC.</p>
<p>YMMV on that one. Both of my kids’ schools wanted their (measly) tax returns, and copies of the w-2 forms if they didn’t file. It wasn’t an issue, but we did have to send them. One kid didn’t qualify for a nickel of need based aid and we had to send it EVERY year anyway (lucky him got chosen for verification EVERY year…why??).</p>
<p>This is a gray area. My sons have a pet walking/care “business”. That, they report and track the income. But any tips from odd jobs or odd stints of baby sitting, they don’t. It has been a good, learning experience for them to learn to track the business income. </p>
<p>So use common sense on these things. A couple hundred bucks earned in babysitting or errands is a whole different thing than substantical, regularly recurring income. </p>
<p>When it comes to PROFILE, they want EVERY bit of money that comes into the house, if you read the instructions. ANY miscellaneous monies. How many people really count every $1 stuck in a helium balloon for birthdays, or tracks other little monetary gifts and tips, I don’t know. </p>
<p>Clearly, if the dollars are reported for tax purposes, they should also go on the financial forms that use tax forms for verification issues. Kelsmom says that $400 is the threshhold where other amounts should be reported. I think there are also SS income guidelines as to when you have to pay SS tax. YOU have to decide when that line is crossed. We drew it at the pet business even though it was initially not that much money. Be aware that if regular monies are going into a student account, it could be questioned if you are selected for verification purposes.</p>
<p>The babysitter needs to file federal and state tax returns and complete Schedule C for self-employment income. Even if no income taxes are due, self-employment taxes are due.</p>
<p>Madison, how many teenage and younger babysitters who occasionally babysit do that? There is law and common practice. I don’t report sales tax on Ebay, Amazon and purchases made out of state either.How about birthday and graduation checks on the PROFILE/FAFSA?</p>
<p>Madison and Kelmsom, I do not think babysitting is self-employment income. Just becuase an employer doesn not withhold does not mean individual is self-employed. I think that the IRS position is that anyone who provides household or babysitting services IN YOUR HOME is an employee. You might want to look at the instructions for Schedule H, form 1040 (which instructs the employer to withhold). So as long as under standard deduction, I dont see a filing requirement (unless the babysitter has other income).</p>
<p>I believe this issue of being an employee of the parents when providing care in their home has played into issues of legal residency, so it has played out in the courts on other issues…</p>
<p>Whether or not it is common practice to do something is irrelevant. Anyone who earns more than $400 in self employment income needs to know and follow the tax laws. I am pointing this out because aid officers are required to request a federal return if the information presented on the FAFSA indicates one is required by law to have been filed. Forewarned is forearmed.</p>
<p>OP stated in the ‘what if’ question that the college student was self-employed. I was addressing that situation, and not making a determination on whether the college student was an independent contractor or an employee.</p>