April 15 is Tax Day
In a monthly poll about nanny taxes Be the Best Nanny Newsletter conducted in April, 2006 the most common reasons parents gave for not paying their employee's nanny taxes were that there was too much paperwork, it's too confusing, and costs too much.
That is why we suggest the nanny purchase inexpensive nanny tax software (available all over the Internet) herself and give it to her employer. The software is not only inexpensive but eliminates both the confusion and paperwork.
Next, make the following points to your employer:
1. It's the law. Your employer is breaking the law by not being tax compliant. Doctors, attorneys, and accountants can lose their practices and licences if they do not pay their nanny on-the-books.
2. Tell your employer that you want to apply for a credit card, buy or lease a car, rent an apartment, or get a mortgage on a house. To do so you must prove you are working. You must pay taxes to prove you work.
3. You must be paid on-the-books to receive social security, unemployment insurance coverage, and an Earned Income Credit.
4. Paying taxes protects the parents in case you ever get hurt on the job. You must be paid legally to be eligible for Medicare benefits, disability benefits, or workers' compensation.
5. If your employer pays you legally they will be able to take advantage of their flexible-spending plan and deduct your salary as a qualifying expense.
6. Your employer has to report your wages and the taxes they withhold for you on their personal income tax return or be liable for hefty penalties.
7. The only difference between working as a legal American citizen rather than an illegal immigrant is that American tax payers are protected by the system with Social Security, unemployment benefits, Medicare, disability, and workers compensation.
8. Feel free to ask your nanny agency staff or any nanny tax company employee to talk with your employer about both the risks of not paying their employee legally and the benefits of tax compliance.