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Case Study: I paid my nanny half on and half off the books and now...

Posted by HomeWork Solutions on Aug 6, 2019 4:08:00 PM
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Case Study_ I paid my nanny half on and half off the books and now...

Our client, Michelle W. called us when she learned there was a problem caused by only reporting part of her nanny's payroll to New York for tax purposes.

Background

Jenna was hired to work at the family’s home as a nanny full time during the week. She was receiving Healthy New York health insurance and the full pay would disqualify her from the benefit, so Michelle decided to pay Jenna part on the books and part under the table. That way, Jenna could keep her insurance and Michelle could save on the taxes.

Challenge

Michelle no longer needed Jenna's full time services after two years as her son moved to a full day preschool program. Jenna filed an unemployment claim and reported her entire weekly income. New York sent Michelle a scarily worded inquiry as to why her unemployment reports over the prior two years were different than the amount Jenna claimed. Michelle was very worried at what to do and didn’t know how to proceed.

Solution

Michelle contacted our team at HomeWork Solutions to help get her sorted out. HWS advised that the proper and safest thing to do is to come clean and modify her prior filings. HWS worked with her to amend two years’ worth of payroll tax filings, including paying penalties and interest. Michelle had to pay quite a bit and did not want to get caught in a pickle again, so decided to sign up for our payroll service for her new, after-school nanny. This meant that she wouldn’t need to worry about reading up on all the tax laws and regulations that are required to pay the nanny that she recently hired to replace Jenna. HomeWork Solutions will now take care of all the details – deducting the employee portion of Social Security and Medicare, taxes, etc.

Jenna herself will be subject to any penalties for accessing public assistance under false pretenses over the prior two years - this will not be Michelle's responsibility.

The Result

Michelle has found a great new after school nanny that has become a special part of their family. By outsourcing her payroll reporting to HWS, she gets to focus on building a great working relationship with the nanny without having to lift a finger when it comes to tax time! And best of all, she never has to worry about NYS tax enforcement again!

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Topics: nanny, agency, senior, CPA

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