Nanny Tax

[Noah930]

Wife is going back to work, soon. So we're looking into getting a nanny, part-time. Just wondering how many people bother on paying the proper taxes on not just nannies, but other people (i.e. housekeepers, day laborers, gardeners, butlers, etc.) employed in your home that aren't procured via agencies/businesses. I think the limit is either $1600 or $1700 per year. If you pay a person more than that amount, you're supposed to pay taxes on them.

Poll is anonymous.

edit: I'm voting "other" as I haven't had the need, so far, to pay a nanny tax.

[Rick Lee]

If you want a political job in the future, I'd pay the tax. Otherwise, I'd ignore it.

[slodave]

Alarick, where'd you get the $1600-$1700 number from?

[Gogar]

Can't you hire them as an independent contractor and give them a 1099 at the end of the tax year?

[slodave]

Originally Posted by Gogar

Can't you hire them as an independent contractor and give them a 1099 at the end of the tax year?

That's what I told him on the phone...

[ruf-porsche]

Originally Posted by Gogar

Can't you hire them as an independent contractor and give them a 1099 at the end of the tax year?

If they work out of your house they are classified as domestic help. If you brought your kids to their house it is considered day care. They will have to report the income that you pay them but you will not have to pay the nanny tax or social security tax.

[Seahawk]

We went the Au Pair route...very happy with the program. We are almost done since the kids are 16 and 14.

No withholding, actually a tax break.

[Neilk]

Originally Posted by Seahawk

We went the Au Pair route...very happy with the program. We are almost done since the kids are 16 and 14.

No withholding, actually a tax break.

Any good stories?

[Seahawk]

Originally Posted by Neilk

Any good stories?

Many...none involving me, however.

I have seen things, my friend.

[HardDrive]

Not just no, HELL no. We not longer have a nanny, but my wife insisted we do it on the books, because she had this fantasy that there was going to be some huge tax write off. Wrong. It was a pain in the rear, and ended up costing us money.

[Noah930]

Originally Posted by HardDrive

Not just no, HELL no. We not longer have a nanny, but my wife insisted we do it on the books, because she had this fantasy that there was going to be some huge tax write off. Wrong. It was a pain in the rear, and ended up costing us money.

That's my point (sort of). I'm all for paying my fair share of taxes and doing things on the up and up. We've never had domestic help that exceeded that $1600 annual amount, so I don't know how to do this. BTW, I got that number from a variety of websites I found from searching "nanny tax".

But, man, it is prohibitively painful to figure out these taxes and file the proper forms. There are services that'll do it for you, and they charge anywhere from about $350-600 annually.

One of the websites said that, technically, calling them an independent contractor wasn't allowed. Something about how unless your home is a place of business and they're providing a service that contributes to your business purpose, blah blah blah.

Other websites claimed there were 2 ways to go about paying taxes. You could just pay your nanny/domestic help, and let them go off and pay their own taxes. Or, you could pay their taxes for them (like any other real employer who deducts Social Security, federal & state income tax, etc.) from a paycheck, and give them a W-2 at the end of the year. Supposedly, doing it the W-2 way allows you (the homeowner) a way to deduct those taxes from yours, thereby lowering your tax burden.

I'm just regurgitating stuff I've found on the internet, so the reliability of my information is only as good as the stuff posted by these companies providing 3rd party nanny tax filing services.

What a ridiculous morass our tax code has become. Why make something so simple (hiring domestic help), so difficult?

[josephsc]

I feel your pain. We pay nanny tax (well... I'm the lucky guy who gets to deal with it). Figuring out how to pay the darn thing is the hardest part. In my state, I have to file quarterly -- a huge pain.... The federal part isn't hard at all if you use TurboTax.

I would personally not bother with filing because of all the paperwork (politics is not in my future, and only 26% of people in my neighborhood actually file it according to a recent survey) -- but our nanny is working on earning a US citizenship and don't want to be an illegal.

[Porsche-O-Phile]

Originally Posted by Rick Lee

If you want a political job in the future, I'd pay the tax. Otherwise, I'd ignore it.

Bah, forget that. I'm just going to cheat on all my taxes and in so doing, assure myself a high-level appointment in the Obama administration.

[Noah930]

Mrs. Noah asks the corollary question: for those of you who pay, which service do you use (or do you just let your accountant do it), or do you figure it out, yourself?

[nostatic]

taxes, schmaxes. Is she hot?

[Noah930]

My wife or the nanny?

The one my wife has picked out is an aspiring actress. But LA is full of those, and she doesn't do anything for me, personally. So I'd say, not hot. Not ugly, but not worth taking clandestine photos and posting them on the internet.

Perhaps I should look into one of those au pair services...