Legal Question in Business Law in Indiana
tax information
If a person babysits in their home and does not turn that money in on their taxes are they breaking any laws? If they are breaking any laws and someone turned them into the IRS what could happen to them?
1 Answer from Attorneys
Re: tax information
Babysitting income must be reported on state and federal tax returns, the same as any other earned income. Failing to report income is a state and federal criminal offense. However, the IRS usually handles the failure to report as a civil matter, meaning they will assess monetary penalties, because they prefer to have the taxpayer's money rather than his carcass. A taxpayer who voluntarily reports prior year income will be greeted with the injunction to go and sin no more. There are many deductions that apply to a business, so the income won't be nearly as much as the total amount of babysitting fees.
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