Sharing with you an article prepared by a CPA as part of an October series titled "Women, Work and Money." The series is sponsored by a generous grant from the Jewish Women’s Foundation of New York.

How to Pay Nanny Taxes (And Why You Should)

As part of our month-long series dedicated to Women, Work & Money, CPA Bette Hochberger offers her advice about paying nannies on vs. off the books.

We all know that the cost of childcare is high. After considering how much we will be paying for a nanny or housekeeper, who wants to think about taxes we need to pay in addition to that amount? Wouldn’t it be easier to just pay your help under the table? It is very tempting to avoid these so-called “nanny taxes,” but here’s why you need to pay them, and an overview of how it’s done.

The IRS and the state you live in require you to pay these taxes–it’s the law! And the consequences are severe. By not paying these taxes you are committing tax fraud. You could face penalties, interest, and, in the worst-case scenario, jail time. Your nanny will also face penalties when she fails to report this income on her personal tax return. You will also be cheating her out of her future Social Security, Medicare and unemployment benefits by not paying the taxes.

Now that you are scared straight, let’s go through the process involved in paying nanny taxes.

(To read the complete article go here.)

HomeWork Solutions publishes a comprehensive Frequently Asked Questions to help families and their caregivers to understand their payroll and legal obligations when they hire a household employee. We also make available a free Nanny Payroll Quick Start Guide, linked below.