Quote:
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.
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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?