Immigrants, including undocumented immigrants, must comply with the same tax laws as U.S. citizens- including paying the so-called "nanny taxes". Allan Wernick an attorney and director of the City University of New York's Citizenship Now! Project, recently wrote an article in the Daily News about tax compliance for non-U.S. citizens and their employers. This includes immigrant nannies!
How Do I Know If I Must File Taxes For My Household Employee?
Under most circumstances, any person employing a household employee is required to give their worker a W-2 form before January 31st following the calendar year if they paid $1800 or more in 20134. Household employees working in 2013 should already have their W-2 forms, which they need to file their own tax returns. A household employee is defined as a worker who performs services for you in your private home that you have the right to direct and schedule. As their employer, you maintain the right to control the worker's schedule and duties.
What If My Employee Is Not A U.S. Citizen?
Workers, documented and undocumented, are legally required to report income and pay income taxes when required. That's true even if they are working “off-the-books,” and their employer pays in cash. If you are working for any employer who deducts taxes from your pay, you may be due a refund even if you are undocumented. It is important to understand that all proposals for 'amnesty' for today's undocumented workers hinge on the workers' compliance with income tax and other US laws prior to their application for a change in status.
How Do I File Taxes Without A Social Security Number?
If an undocumented worker does not have a social security number, you can file a tax return using an Individual Taxpayer Identification Number (ITIN). You can obtain an ITIN by including IRS form W-7 the first time you file a tax return.
What Benefits Can A Permanent Resident Expect By Being Tax Compliant?
Permanent residents have a particularly good reason for complying with Federal and State tax laws. If a permanent resident applies for U.S. citizenship, the U.S. Citizenship and Immigration Services will ask you for proof of tax filings, says Wernick. You can naturalize without showing proof of tax filings only if you earned so little that the law didn't require you to file a return.
What About Employees That Hold A G-5 Visa?
Foreign diplomats and foreign staff members of the United Nations and other "Non-Governmental Organizations" associated with the UN are permitted under US law, as a courtesy, to bring their foreign domestic service workers to work in the United States. These foreign domestic service workers are employed as nannies, maids, housekeepers and senior caregivers. The US State Department imposes strict rules that the foreign diplomat must agree to, contractually, with the domestic worker that governs their employment in the United States as part of the visa application and issuance. Our free G-5 Domestic Quick Start Guide will ensure that you have all the tools necessary to become tax compliant.
For more information on how to pay your household employee legally, download our free Household Payroll Guide.