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She is a family member not a Home Health Aide but we do pay her.

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I believe she does. I'd recommend seeing a tax professional on this. It's a fine line between extra income vs. Employer/employee. There is a maximum amount to be considered as extra income. Go over and it's now a difficult scenario. As employer/employee -both of you are subject to state/income tax.
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Strictly speaking, she is "self-employed", or else she is your employee and you should pay the "nanny tax", which is a somewhat complicated issue.

Another way of looking at it is that if her income for the year is more than $5,950 and she is your dependent then she "should" file. Do you claim her as a dependent on your taxes? If not, she can earn up to $9,750 without having to file. Source: IRS 1040A instructions for 2012.
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your mother cant necessarily claim the wages for credit on her fed taxes cause she probably pays no fed tax. under 600.00 a year in cash doesnt have to be claimed for your daughter, anything over that does. id pay her cash.
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I don't know what the minimum is, but under a certain amount of annual income you don't have to file. I would google the question: "what is maximum income I can make without filing taxes"?
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