Hellobee Boards

Well, it's illegal, so there's that. If you want to cover taxes, you might want to check on the cost. They are between 25 and 30% typically, which may be a huge amount if she is full time! You can't claim them unless she pays them and she may just not want to. She has to give you her social security number. but that's it, it's very easy. That's how we do it with our in-home daycare. There's no W2, I just add up the weeks that we paid her (50 weeks a year at X) and plug it into Turbo Tax.

@littlejoy: I'm no expert, but I don't think you can just claim them for this year after paying her under the books for 9 months. I think moving forward you can do so, but not if you've been doing it illegally. You may get hit with a fine.

Someone who is in the know should chime in!

I don't know what state you're in but I know for NY we had to register as a household employer, get disability insurance, workers' compensation, etc. We have a W-2 and I9. We don't use a service but I think they are nice if you can swing it--this whole thing is a pain in my neck and I'm already late on paying my quarterly taxes.

Ugh, yeah, you really should speak to a local lawyer quick about that (in case she follows the law and claims the income and you owe penalties), and about what you should do going forward. Some states are more small business friendly than others – ours for instance is a bear. You may be responsible for withholding and paying into federal unemployment tax/fund, state unemployment tax/fund, social security and medicare, state income tax and more – much, much more than just giving your accountant her ssn. Some states will also require you to take out and carry a workers’ compensation insurance policy. She will be your employee, and as an employer you will have a lot to comply with. IRS rules, labor laws, you name it.

@littlejoy: Yeah it would just make me suuuper nervous. Literally all we do is take T's SSN and plug it in at the end of the year. I don't know that a nanny would be inputted differently. We don't get a receipt every time we pay her, but I see that it's been deposited, so I could trace it if i had to. I guess if you wanted to pay her for this year, you could give her a lump payment to make up the difference? Not sure.

@littlejoy: OH OK. Haha. I just didn't want you getting fined. My friend who lives in Louisiana paid her nanny on the books and didn't have the same requirements that I do in NYC. She still had to do the W4 and I9 and she didn't pay quarterly taxes, they just paid back the gov't. through when they did their taxes. You should look up your state's requirements for household employees.

I don't think you'd have to comply with all the labor laws as a an employer would. She would or could be 1099 contract labor. Ask your accountant that you work with. They will know your state and local laws better than any of us and probably have past clients who have been in the same situation.

We use Home Pay (Breedlove) as well and am pretty happy with it. It is more expensive than doing it yourself, but we just had to fill out some forms and have our nanny fill out a few forms - they take care of the rest. They got us a household employer tax ID number, generate paystubs and W2 forms, calculate taxes and withdraw the quarterly tax payment from our account.

Household employees, even part time nannies, are not considered independent contractors for federal tax law purposes. http://www.irs.gov/publications/p926/ar02.html
In my experience, state labor laws also apply.

I highly encourage you to comply with all labor and tax laws. I know a lot of people don't, but intentional noncompliance can be punishable by imprisonment. It's not a joke--it's a crime. I swear I am not trying to pick on you! I am just always surprised at how many good, law abiding citizens find this one area of the law "optional."

We love the company Breedlove, which takes care of pretty much all of the tax paperwork and functions as a payroll service. They also identify what labor laws with which you need to comply.

@littlejoy: I think we pay $800 a year. But that is for everything. They have ala carte pricing as well. http://www.myhomepay.com/Service/Nanny-Tax-Service-Costs

You can probably find someone local for cheaper.

Call your accountant. Our CPA handles all the bookkeeping and issuing the paychecks for us and we just have them authorized on our Quickbooks. We just have a simple contract with our nanny (my mom) and filled out her I-9. We just keep track of hours like a time sheet and email our accountant.