Mrs. Bell, an SSI recipient, reports at a redetermination that she began babysitting
for her grandchild while her daughter is working. Sometimes she has the child at her
home, but as a general rule, she goes to her daughter's home because the child's toys
and other items are there. She does not babysit for anyone else. She receives about
$20 a week from her daughter.
Although a caregiver is a recognized occupation, Mrs. Bell is not holding herself
out as a provider of daycare services, nor does she have intent to produce income.
The CR determines that Mrs. Bell is not self-employed.
However, if the income meets the definition of wages for the title II annual earnings
test (e.g., an employer/employee relationship exists between Mrs. Bell and her daughter),
it would be considered wages even though no FICA taxes are being deducted. If a determination
is made that the activity does not result in wages or NESE, then the income derived
by the activity is unearned income, coded as type SW on the SSR.
Mrs. Simon is filing for SSI aged benefits. When asked about any income she receives,
she indicates that she does babysit for various neighbors and friends, but does not
consider herself as self-employed and files no tax forms for this income. She began
providing these services when her own children were young to make some extra money.
She relies on obtaining new business via word of mouth. Although Mrs. Simon does not
consider herself in the daycare business, she meets all of the factors indicating
the existence of a trade or business in RS 01802.002. Therefore, the CR determines that she is self-employed and institutes development
of the NESE.
Mr. Lyons, an SSI recipient, reports that since he needed extra money to meet his
rent and food expenses, he began to collect aluminum cans off the street to redeem
at the recycle center for cash. In addition, sometimes his neighbors or local organizations
contact him to pick up their cans. He does not file any tax returns, but he estimates
that he makes about $200 a month.
Since this is an ongoing, regular activity that includes some third party collection
pickups and was established with the intent of producing income, it is determined
that Mr. Lyons is self-employed and development of the NESE is initiated.
Mr. Kent, at a redetermination, reports that he earned some money cutting the lawn
for one of his neighbors. His car needed some unexpected repairs and he did not have
the money. His neighbor told Mr. Kent that he could cut his lawn for the month of
July for $80. Since he needed the cash to pay for the repair, he decided to cut the
lawn. Mr. Kent is not holding himself out as a lawn service. Further, this is not
an ongoing regular activity nor does Mr. Kent plan to do this activity to make a profit.
He only did it to earn enough to pay for the car repair. Therefore, it's not NESE.
However, even though there was no FICA withheld, the CR should develop whether the
income is wages for annual earnings test purposes (e.g., does an employer/employee
relationship exist). If a determination is made that the activity does not result
in wages or NESE, then the income derived by the activity is unearned income.