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Nanny--under the table or 1099?

jam1111jam1111
in Working Moms

So, we're hiring a nanny.  I assumed we'd go under the table, but 2 girlfriends of mine pay their nannies taxes and I hadn't even thought about it before I discovered this.  What does everyone else do?  We've agreed upon $10/hr (40-50 hrs/week)...if we pay her taxes, it would approx come out to $13/hr from what I'm told.

If you pay her taxes, do you pay FICA, Medicare, and get worker's comp?  Also, income tax??  Do you 1099 them I assume?

 Any repurcussions for just going under the table (obviously fines from the IRS etc if caught). 

 I think our girl assumes we'll pay under the table, but I just hadn't even THOUGHT about taxes, until my 2 other friends said that they pay their nannies taxes.

 

 Also...do you pay in cash (or write checks under the limit...isn't it like $1,500 or $1,600/year). 

 

Thank you!

Lilypie Second Birthday tickers 1st m/c July 2008, 2nd m/c December 2008, Baby boy born in 2009!, 3rd m/c (c/p) June 2011, 4th m/c September 2011
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Re: Nanny--under the table or 1099?

  • AlisaSAlisaS member

    Technically, yes, you need to pay for all of those things. 

    Call me paranoid, but I don't want anyone working for a wage in my house who isn't licensed and bonded and pays their own insurance. I don't need the liability of getting sued because someone trips on the stairs and twists an ankle.  I have seen it happen far too often.

     

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  • The_Jen626The_Jen626
    After being audited 2 years ago, I am way too paranoid now.  I would 1099 her for sure. I know that there are services that can do this for you if you are interested in that.
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  • Stacyc625Stacyc625 member
    As an accountant- i would HIGHLY recommend you taking the taxes out. There are several VERY useful websites that pretty much calculate everything out for you.
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  • IblamethebeerIblamethebeer member

    We pay taxes.  It's legal and fair. 

    I found the information on 4nannytaxes.com really helpful.

    from what I remember in their starter booklet, you can't use a 1099 -- someone who works 40 hours per week in your home is an employee, not an independent contractor. 

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  • Erika&BrianErika&Brian

    I suggest talking to an accountant or some of the nanny payroll companies mentioned above. It's a W-2 you would need to provide (not 1099), and yes you would be responsible for Social Security (6.2%) , Medicare (1.45%), workers' comp ins (price varies), as well as unemployment taxes (vary by state). It is not cheap, but insurance never is, and in my opinion doing it legally/right is insurance. 

     

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  • SoonerMagicMamaSoonerMagicMama
    We pay all the taxes and do everything above the table.  The nanny said she's been paid both ways and doesn't care.  But, I'm an attorney and neither DH nor I can rule out the possibility that one of us will someday run for office .... so everything has to be clean.  Besides, it's the right thing to do.
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