nanny taxes

laila245

Hello! I have recently started my search for a full-time nanny. It is my first time doing this, and I am a bit confused (so I apologize if this is a stupid question). A couple of people I interviewed said they do not want to have nanny taxes taken out. They just want to get paid "under the table". Has anyone experienced this and what did you do? Did you agree to that?

BabyHope2013

We use a home daycare---but I can tell you that if you pay under the table I don't think that you can claim the child care expenses on your taxes. Our daycare gives us a statement at the end of each year showing how much we paid for the year and we file it with our taxes for a tax credit.

kikimeemee

I don't know anyone firsthand who does not pay under the table. Seems to be more common -- at least in my world

2-Step

The most likely way it would affect you is that you are unable to claim your child care credit on your taxes and/or contribute to a tax savings account for child care. If you plan on doing this you should calculate that as part of your expenses of hiring this person because it will affect your year end return and that is money out of your pocket. The other issue I have heard of is that it is often harder to file a complaint against someone working under the table or take any kind of legal recourse if they wrong you in any way, because you will also be in trouble if you draw attention to your illegal arrangement. Can be a catch 22 if things go sour. 

rklinge0

What you can do is meet with an accountant and ask what is the most you can deduct for child care without you having to pay s.s. Then talk to potential nannies letting them know what will be reported. This way both of you get something out of it.

xc1148

I personally wouldn't agree to that because you, as the employer, are the one taking all of the risk if something goes wrong.

If you decide to do it above-board, we are using sure payroll and have had a great experience with them so far. Really great customer service and they are easy to get a hold of.

chicagobride_07

We pay on the books and use a payroll service that handles everything. We also have workers comp coverage. Technically, all of this is required by law (in our state, at least). It is a lot more expensive to do it this way but it just gives me piece of mind.

mamaskittles09

I wouldn't agree to this. You get huge tax credits for paying for daycare.

Elsa1984

I wouldn't agree to it either. I have done both, and I would 100% go through a payroll service.