Generally, in life, it pays to do things right the first time. Your nanny payroll taxes are no exception to the rule: while it may be tempting to evade these pesky taxes, in the long run, you will be thankful that you managed your household employment taxes well. It will cost much more of your money, time, and patience to deal with the consequences of tax fraud than to file your payroll taxes correctly the first time around!
HOMEWORK SOLUTIONS WILL MANAGE YOUR NANNY TAXES FOR YOU!
A short time ago, we worked with a family in New York who was investigated for payroll tax fraud. The family employed a nanny for ten months, who, after being let go, applied for unemployment benefits. The family was registered as a household employer and had been dutifully paying nanny taxes; however, they had misreported the nanny’s wages as $200/wk. When the nanny declared in her unemployment claim that she made $600/wk, the unemployment compensation staff were alerted to the inconsistency.
DON’T FIND YOURSELF HERE! FILE THE CORRECT PAPERWORK
The family was forced to correct the record and pay all of the associated taxes (including what would have been the nanny’s portion) in addition to penalties and accountant fees. They also had to amend their previously filed tax returns, correct the nanny’s W-2, and pay additional federal taxes and interest (which, in this case, totaled over $1,100).
Want to learn more about the nanny tax and the employer’s financial obligations? Click here for HomeWork Solutions’ free Household Payroll Tax Quick Start Guide.