How Do Taxes Work for Dog Walkers and Nannies?

Working with dogs or babies all day might be the ultimate dream job. But when it comes to payments, things get a bit complicated. Typically, these payments are received in cash and are under the table, so they’re not usually reported.

But in the eyes of the IRS, this income needs to be reported on a tax return. Whether you're a seasoned dog-walking expert, just starting your adventure in this canine-centric career or an experienced baby-loving nanny, taxes and tax reporting play an important role in your gig.

Taxes and dog walking

Dog walking is a great gig to earn some serious cash. As a dog walker, you're like the CEO of your own doggy business and have to handle your own taxes. If you make more than $600 in a year, your clients might give you a 1099 tax form. But, even if they don't, you still need to tell the IRS about it.

You’ll also need to pay estimated quarterly taxes to cover your portion of SECA taxes or taxes to contribute to Social Security and Medicare. It's around 15.3% of the money you make, with 12.4% for Social Security and 2.9% for Medicare.

Dog walking tax deductions  

One way to save on dog walking expenses is by itemizing your expenses on Schedule C. You can write off many expenses related to your dog business if you keep records of the invoices and receipts.

FlyFin makes tracking receipts and invoices super simple. All of your expenses are tracked in one place, and A.I. scans them to find every possible deduction. Then, CPAs will help file your tax return and answer all your tax-related questions.

Rover taxes

Rover is an online marketplace that specializes in pet care services. So, instead of running your own gig, you bid on jobs and get your clients from the portal. Once you create your profile, you're free to apply for any job, like watching a Shih Tzu over the weekend at their penthouse or walking a Golden Retriever every Wednesday morning.

Rover doesn’t automatically take out taxes, meaning it’s up to you to report your income from Rover to the IRS. How you receive your Rover payments will determine if you’ll receive any tax documents from Rover.

Many individuals on Rover are considered independent contractors rather than employees. This means you are responsible for managing your own taxes, including reporting income and paying self-employment taxes.

If you received $600 or more in payments through Rover, Rover will send you a 1099-NEC. If you received Rover payments through Paypal, expect to receive a PayPal 1099 in the mail or your inbox. The IRS also receives a copy of the 1099 forms, so make sure you report the income on your taxes.

Nanny taxes

Suppose you work as a nanny, caregiver or babysitter, caring for children in someone else's home. In that case, you're considered a household employee, not an independent contractor, as per the IRS. So the family employing you is the employer, and you, as the nanny, are an employee.

The family hiring you might need a special tax ID number and may take out Social Security, Medicare, and income taxes from your pay. At the end of the year, the family gives you a W-2 form, which shows how much you earned and the taxes taken out. You'll need to report your income on your own tax return. You might have to pay self-employment taxes on what you earned, including Social Security and Medicare.

One way to save on your nanny taxes is by taking 1099 tax deductions related to your profession. The IRS allows you to deduct these expenses from your income as long as they are considered ordinary and necessary.

You also might need to pay extra taxes depending on the state you live in.

Care.com taxes

If you work as a nanny through Care.com, don’t expect a Care.com 1099 tax form to be sent to you. Care.com simply matches families and nannies. The pay is typically done outside of the platform. Also, 1099s are sent to independent contractors, and if you make more than $2,600 while working for one family, you’re now considered a household employee.

Recently, Care.com launched a service called HomePay to help families navigate nanny taxes. This service helps families with:

• A personalized payroll process
• Automatic tax filing
• Unlimited access to tax experts
• Nanny health insurance
• Nanny unemployment insurance
• Nanny Social Security benefits

FlyFin is another great platform available for all your nanny tax filing needs. With a CPA and A.I. combo, you will surely be prepared for tax filing.