Nannies & Taxes
Many nannies are paid under the table, especially part-time and occasional babysitters. However, just because many families do this, doesn't mean it is the right thing to do. Paying your nanny through payroll or taxing her paycheck may sound complicated and more trouble than it is worth, but in the long run, it is best to do it the right way.
While I am no tax expert and can't give you tax or legal advice, I have come across some information that I as a nanny myself, as well as the owner of a nanny agency have found helpful and interesting. According to the IRS, nannies are considered household employees rather than independent contractors (as many consider themselves). By being classified incorrectly, this can not only hurt the nanny but the family as well. I do not know all the specific details but have learned this from my own research: as an independent contractor, the nanny ends up paying more in taxes (if she is reporting her income) and the family could get in trouble for not paying taxes on the nanny wages.I encourage you to read this CNBC article which goes into more depth on the subject: http://www.cnbc.com/id/100579328
In addition, I highly recommend contacting someone who really understands nanny taxes and how household employees work, because your lawyer or tax adviser might have the best intentions, but may not know or study these regulations the same as someone who specializes in this field. I recently spoke with Bob King of Legally Nanny and not only is he happy to help with questions you may have but also has a great package to set you up completely legal with your nanny or household employee!
Legally Nanny provides the legal and tax advice you need to hire and pay a nanny or other household employee legally. We fill out all the initial forms, draft a personalized employment agreement, and handle the legal and tax issues so you can save on your taxes and spend more time with your family.
Check out our website at www.legallynanny.com today![/box]