1. A typographical error.
HWS' Client Care Manager, Mary Crowe, shares the story of a client who issued her nanny a 1099 form, and later found herself on the wrong side of the IRS.
Our client, Linda M. came to us when her relationship with her nanny was in crisis over taxes. Linda lives in New Jersey and she hired her nanny in the fall and was paying her in cash every week. She has an accountant to handle her income taxes, and when she hired the nanny her accountant told her that everyone treats their nanny as an independent contractor.
Can you believe another year has flown by already? And 2014 is right around the corner …
HomeWork Solutions wants to help you stay ahead of the game by summarizing important deadlines and considerations before you get caught up in the holiday festivities.
Families sometimes try to completely side step their employment tax obligations by giving the nanny a 1099 form at year end. In so doing, they avoid paying their share of Social Security and Medicare taxes, as well as unemployment taxes, and they push their tax obligations on to the nanny. This path allows the family the benefit of child care tax credits without the corresponding expense of paying their portion of the employment taxes.
The SSA has recently resumed sending DECOR notices, commonly referred to as "No Match Letters" to employers when the name and Social Security Number on a form W-2 do not agree with the SSA's records.