- Establishing a legally compliant and professional arrangement with your household employee benefits both of you.
a. Appropriate payments to household employees, including those to a person who cleans your house, might qualify for the child-care credit. That’s a dollar for dollar credit if you qualify.
b. It helps your employee establish work history, credit, U.S. citizenship, and other benefits. A legal employee can take advantage of Social Security and Medicare benefits, and may be eligible for unemployment compensation and the Federal Earned Income Credit.
- Not reporting payments to household employees could cost you big bucks in terms of penalties and interest should you get caught.
- Employers who do not pay legally risk the chance of an audit, which can be costly and very time-consuming. There is no standard penalty. Penalties are determined by the IRS based on its analysis and the severity of each case.
- Employers who do not pay legally risk the chance of an audit, which can be costly and very time-consuming. There is no standard penalty. Penalties are determined by the IRS based on its analysis and the severity of each case.
- Not paying social security taxes, assisting with withholding, or meeting state requirements for workers’ compensation and health insurance (as applicable) isn't just cutting through administrative hassles, it's illegal!
- Every fiscal quarter of sitting, housecleaning, nanny-ing, personal assistant-ing, or under-the-table anything - doesn't count toward the employee’s Social Security benefits unless the Nanny Tax has been paid.
- Every fiscal quarter of sitting, housecleaning, nanny-ing, personal assistant-ing, or under-the-table anything - doesn't count toward the employee’s Social Security benefits unless the Nanny Tax has been paid.
- Opening the door to other legal issues, avoidance of “paying on the books” could result not only in IRS penalties, but state issues should your employee or former employee ever file for disability benefits.
- The best route is to make payroll taxes a condition of employment.
- The best route is to make payroll taxes a condition of employment.
- If you ever run or are appointed to political office, you can unequivocally state with a clear conscience that you legally abide by, and are compliant with, the Nanny Tax....
“Next Question Senator?”
For more information, consult IRS publication 926 (available online at www.GTM.com), or for a FREE – No Obligation Tax Consultation, contact GTM at 800.929.9213 today! Or chat LIVE with one of GTM’s Tax & Payroll Specialists at www.GTM.com.
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