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Nanny Tax?
Old 11-10-2006, 09:50 AM   #1
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Nanny Tax?

I plead guilty to not withholding SS from what I pay my household help. She has indicated that she wants cash now and does not want to wait for SS in 20 years. Makes it easier on me also, as I'm not sure that I would put up with all of the w/h and sending money to SS etc in a rather small amount. I doubt that she files with the IRS.

Anyone here decuct SS from their household help compensation? How about income tax (W-2)? Has the IRS ever come after a non-politilal person (regular Joe) for this violation of IRS rules/regs?

Principally, the IRS is looking to collect Social Security and Medicare taxes on wages paid to your household help. The rate is 7.65 percent for the employer, and you must withhold 7.65 percent from payments to the employee (for a total of 15.3 percent). If you choose, you can pay the 7.65 percent that is supposed to be withheld from the employee, but you would count this as additional wages to the employee when you issue her a Form W-2 at the end of the year.

http://www.bankrate.com/brm/itax/tax...nny_tax_a1.asp

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Re: Nanny Tax?
Old 11-10-2006, 09:56 AM   #2
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Re: Nanny Tax?

I'm guessing you're part of the silent majority who participate in the informal labor market. I don't report payments made to my MIL for childcare.

I'm guessing in order to technically comply with the IRS regs, you'd have to issue W-2's to your neighbor when you pay them $10 to feed your cats when you go out of town for the week? Or is there some sort of de minimus amount that you don't have to report/withhold on?
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Re: Nanny Tax?
Old 11-10-2006, 10:19 AM   #3
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Re: Nanny Tax?

Quote:
Originally Posted by justin
I'm guessing you're part of the silent majority who participate in the informal labor market. I don't report payments made to my MIL for childcare.

I'm guessing in order to technically comply with the IRS regs, you'd have to issue W-2's to your neighbor when you pay them $10 to feed your cats when you go out of town for the week? Or is there some sort of de minimus amount that you don't have to report/withhold on?
Same onus as always..........the taxpayer. Doubtful you'll have an audit trigger if you're paying cash to the MIL or neighbor. However, if it's an illegal immigrant nanny, dude you're on your own.............
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Re: Nanny Tax?
Old 11-10-2006, 10:34 AM   #4
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Re: Nanny Tax?

Quote:
Originally Posted by justin
I'm guessing in order to technically comply with the IRS regs, you'd have to issue W-2's to your neighbor when you pay them $10 to feed your cats when you go out of town for the week? Or is there some sort of de minimus amount that you don't have to report/withhold on?
In 2006 federal minimum is $1500 per year. But your state might have lower minimums.
You might be also on hook for state withholding and state unemployment insurance.
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Re: Nanny Tax?
Old 11-10-2006, 10:39 AM   #5
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Re: Nanny Tax?

A Catch 22. No one wants to pay SS for this type of help. As stated the headaches alone make it painful. But at some point that nanny is going to want / need SS and contributed nothing to it.
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