Internal Revenue Service United States Department of the Treasury
Level Basic Intermediate Advanced Military International

Other Income, Form 1040 Line 21

Other Income

State Agency Payments for Child Care

Payments from state agencies to family caregivers who care for children are taxable and may be found on Form 1099-MISC in either box 7 or box 3.

  • If family caregivers are not conducting a business of caring for children, this income is reported on Form 1040, line 21
  • If the family caregivers are conducting a business of caring for children, this income is reported on Schedule C-EZ/C

State agencies may not know if the family caregivers(s) are operating a day-care center and may prefer to report the payments on Form 1099-MISC, box 7.

Caution

If the family caregiver is running a day-care center business, these payments are subject to self-employment taxes. For additional information, see Form 1099-MISC Instructions for reporting boxes 3 and 7.