Nanny Payment

I am a nanny & I report my income. My employer uses a company that handles the taxes etc. I wouldn't work under the table. That just feels wrong not to pay taxes on my income. The only exception is for one time babysitting jobs. I take those once in a while.

Be up front and honest regardless of how it's done anywhere else. Hire a person who does it 'right'.

Do NOT do it. Do you want your child in the care of a low life that doesn't pay their bills? It's illegal.

Go legit and only hire someone legit! If it comes back to haunt you it will be in a big tax, legal and financial sort of way.

For you to get the tax credits they need to claim the income or one of you is likely to be "caught" on that (same for home daycare providers...I have been both nanny and dc provider). If they got hurt, you "fired" them (unemployment), etc..all of those scenarios involve being legit.

Make sure you are paying correctly, doing overtime if it applies and all the other rules. There are great resources out there to protect and inform both families and the nannies.

In my opinion a PROFESSIONAL nanny is one who has this in her arsenal. Care might be great with an under the table person, but not very professional, really!

JMO~

Are you going through a nanny service?

It should be on the books. If its not on the books, then you can't claim the expense on your taxes under childcare.

no its not how its done for regular real nanny positions. If you pay under the table you can't claim it later. I pay my own taxes. my boss pays me a check each friday. he tells me what he is claiming and i claim that as income. then my tax guy does my taxes. If they are trying to get you to pay under the table /off the books then they are not planning on claiming it. which means you can't claim it at the end of the year either. keep looking.

I would not deal with anyone under the table. That should send red flags everywhere to you. it sounds like you have received the red flags well.... follow your gut.

You are doing the right thing to pay properly.

1st,,, never mess with the IRS. You do and you are begging for trouble.
2nd... by asking you to pay under the table, they are admitting that they are dishonest.
3rd... you don't want a dishonest person watching your child do you?
4th... lets say they do have some sort of accident, fall, etc and then you bet they will sue you for anything they can get because... they are dishonest.
5th... there is a reason somewhere as to why they want to be under the table and you know as well as we do that means something somewhere is illegal.

Good luck. Keep looking for an honest person.

I'm not local but I don't really think it's the norm for a professional nanny. Most want to pay into social security etc. And if you're offering to gross it up, they should be happy. When we hired twice through an agency, we paid taxes. And as far as deductions, the whole year is not deductible! I wish it was... I think $5k via your dependent care account is the most that's tax free. I don't think someone wanting to be paid off the books means they won't be a good nanny but it does open you up to some liability I think.

Pay her on the books. It's the right way to do it, even though it may not be the usual way.

Sometimes those "Illegal" persons are here just following the american dream and trying to make money to send back to their countries and their loved ones.

You can find the most adorable nanny, committed to your child, nurturing and responsible - yet with out papers to legally work - but can't they do the job?

I will not eliminate the possibility just because this. My nanny was an illegal immigrant and she took care of my and my sisters like the most caring person, I would not change her for anything else in the world, and we grew up to be fine ladies!

Both are common. I don't think there is a norm. (Although, professional, highly experienced nannies who aren't in the country illegally tend to be legit.) Some things to consider:

1) Paying under the table tends to be cheaper. You can pay them less/hour and they will still make more because they aren't paying taxes.

2) If you want to claim a childcare benefit on your taxes, you have to go legit. You'll need an employer ID number, etc.

3) If you're afraid of potential liability issues, go legit. You'll be covered under your state's plan. Of course, if your nanny is not legit, it's unlikely he/she'll go after you for lost compensation if she gets hurt on the job. But, any injury in your home might have to be paid out of your home insurance, and your insurance company might balk if they find out she's an under the table nanny.

4) If you or your partner get a job in the future with any sort of security clearance or political issues, this could come up and make it difficult.

So, while there are benefits (easier and cheaper in the short term) to paying a nanny under the table, there are potential consequences.

Good luck with your choice.

My sis is interviewing nannies and is having the same problem. She needs the deduction for taxes, so she does not want to pay under the table. Good Luck!

We pay "on the books" and claim it on our taxes and our CPA gives us a form (?1099) to give to her which states how much we paid her for that year so she can also claim it on her taxes.

No it is not. They want free money. I would not increase the amount either. That is not fair to you. If you increase their income they still make the same but you are paying more. It's not fair. It's also not normal.

If you contact a CPA who is familiar with hiring contract labor then ask them how to go about doing this with the nanny. That way it is a simple paperwork thing. You hire them to do a job and have a set amount they get paid, they are responsible for paying their own taxes. You do not have to pay SS on them, like hiring a plumber, you don't pay taxes on what you pay them, they are contract labor.

We use substitute teachers in child care like this. They are paid $x per hour of work and then paid. I did not pay any taxes and did not have to file any particular forms at tax time. But a CPA would know exactly how to go about doing this. Calling them a babysitter since they don't live in is okay too. The title "Nanny" implies a lot more that the term "babysitter".

It really depends. I have found that the term nanny is thrown around in situations where it does not apply. So when someone asks nanny questions I don't know how to answer.

Like we have a girl that would come over during the summer and take them places. She was a college girl and we paid her cash. That is the norm where we are at because it isn't their career, ya know? She is a babysitter.

Now someone year round is what I would consider a nanny. For them I have never heard of paying under the table.

Another way to look at it is you don't have to file taxes if your income is under 9,900 so if their income is under that then I don't bother.

If someone wants to be paid under the table it is likely for one of two reasons. Either they are not paying their fair share of taxes (illegal) or they are not in the country legally and therefore not eligible to work (also illegal). If you go along with it, you also are doing something illegal. If you do this, make sure you and/or your husband have no desire to run for political office. Also if/when you get caught don't feel sorry for yourself.

Another angle is what if they do something negligent with your child. Are you going to hesitate to report them because the hiring/payment arrangement is not on the up & up? Think about it & do the right thing.

Nannies are not regulated..which means they are not required to be finger printer, have Dept. of Justice and/or FBI clearances. They are not required to have pediatric first aid and CPR and they are NOT licensed. This means you are not eligible to take your child care credit on your income tax. They have no early childhood education and the bottom line is if something were to go wrong you have no recourse.

I would strongly suggest other options such as State Licensed Family Child Care. These gals are state licensed, in most cases offer curriculum far exceeding center based care. You can check providers out in your area by going to www.orangecountychildcareassociation.org

Good Luck

Many families pay their domestic help "under the table", as long as you are not planning on running for office, being audited or writing off those services, and paying cash, you will probably be OK.

If you go the legal way, you must make sure your employee is legal, has a social security number (not a fake one) and either deduct taxes or have them sign a 1099...then your safe.

Blessings....

I think we are the only parents paying a nanny that our accountant's firm handles with their payroll service.

The one thing I want to mention is that people who are always paid under the table don't qualify for social security and medicare when they are old and will NEED that safety net. I know it's expensive for employer and employee, but if it's a person who you expect or want to have with you several years, it's in their best interest. They need 40 quarters of working and paying into the system.

Remember the movie "The Help"? (If you saw it.) One of the things the maids and nannies talked about is that the employers refused to pay their social security, so when they were too old to work anymore, they were destitute.

Dawn

I don't want to offend the majority on here who answered to "go legit" and do everything legally - but in the area where you are at, the majority of the nannies you are going to see are "under the table" and most likely illegal immigrants. The only way to get around this problem you are having is to pay Alot more and go through a professional agency. I have done both and, sorry to say it ladies- the illegal was a much better nanny!