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3 Little Known Reasons Why Paying Nanny Taxes Pays Off In the Long Run

Posted by HomeWork Solutions on Jul 5, 2016 7:00:00 AM
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3-reasons-pay-nanny-taxesDespite the best efforts of Congress, the number of families that that fail to pay their nanny taxes each year is estimated to be 1.8 million. Aside from the fact that these families technically commit perjury on their family tax returns every year, they also deny their household employee (nanny, housekeeper, senior care nurse, etc.) of retirement and unemployment benefits. As if these weren’t reason enough, here is a list of five more important reasons why you should pay your nanny taxes (and some of them might surprise you!).

1. Valuable tax credits!

Many people are unaware that their household worker’s payroll and associated taxes may be used to qualify for special tax treatments afforded for childcare and dependent care expenses. In many cases, the benefit of these tax breaks can completely offset the expense of nanny tax compliance.

2 . No statute of limitations for federal payroll taxes.

In other words, a family that fails to collect and pay the federal employment taxes in a timely manner becomes responsible for both the family’s and the employee’s contributions. And the risks of being caught don't go away after a few years.

Not long ago, Home Work Solutions worked on a widow’s estate that became a domestic employer tax nightmare. When the employer passed away, her housekeeper of almost twenty years filed for social security benefits only to discover that no earnings had been reported for two decades. The estate became liable for $95,000 of back taxes and fees.

Don’t let this happen you or your loved ones! Download HWS Guide to Household Payroll and let us simplify your nanny tax compliance.

3. Injuries on the job happen.

Whether your housekeeper needs stitches or your nanny breaks her arm, you want to be prepared for the potential expense with worker’s compensation insurance. If you are uninsured you may be liable for thousands in medical care costs, rehabilitation costs, and even lost wages. You can only obtain worker’s compensation insurance coverage when you’re paying your household employee legally.

Consult a Household Payroll Expert

Topics: nanny taxes, household payroll tax

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