Knowing the Risks of Tax Evasion, Why is Nannygate Still an Epidemic in America?It is estimated that 80% to 90% of household employers don't pay taxes on their household employees.
Nannygate is the popular term coined to describe these household employers who don't pay taxes. Nannygate is an epidemic in America.
There is a long list of reasons parents should pay the nannies they hire legally. Not paying taxes for household employees is tax evasion. Parents that are not tax compliant are opening themselves to potential civil and criminal penalties and potential liability for taxes, penalty taxes, and additional charges. Parents that work as accountants, lawyers, or doctors can lose their licenses to practice their profession if they don't pay taxes for their household employees.
Parents are also are short-changing themselves if they could qualify for a medical expense deduction or child care credit if they cannot prove their deduction before IRS without admitting their tax evasion.
Knowing all of this, why is Nannygate still an epidemic in America? Why do you think most parents don't want to pay their household employees' taxes? Have parents given you the run-around about paying taxes? What excuses have parents given you in the past?
5 comments:
Too much paperwork. And honestly I wish I didn't have to pay taxes. I mean I can save that money myself for an emergency fund, retirement fund, etc.
Chelle:
Mine do, I wouldn't take a position that wouldn't pay taxes--huge red flag!
Rebecca:
Yes, it's difficult!
Jordan:
I've been looking for a position for nearly 8 months now. It's very hard to find families willing to hire on the books. Even harder to find families willing to pay overtime at time and a half. I'm going through this right now.
Kristle:
i am a baby sitter.if your looking for a sitter let me know Thanks
Samantha:
'Nanny' is such a widely used title that society often considers a sitter and a Nanny to be the same thing. A respectable family looking for a legitimate Nanny, will not even question whether or not taxes need to be filed.
Darlene:
I have had 50/50. I ask for atleast 80% on the books and rest in cash.
Kari:
I have never had issues
Sarah:
Haven't found a family willing to yet. So, if I want something done right I just do it myself.
Sarah:
I've found that most families I've worked for (or interviewed for) ask which I would prefer. The family I work for currently planned to pay me 1/2 and 1/2, but ended up paying me all on the books, and helping me out with my health insurance instead. :)
Darlene:
I as well get 50% of healthcare and gas money. So I definitely take this into consideration. My current employer gave me a dollar raise each year and a cash Bonus of my weekly pay+.
Debbie:
Uh oh Darlene I'm not sure you should admit you aren't reporting your full salary publicly it's illegal. Be careful. :)
Michelle:
Some states seem to have more compliant parents than others. Check out last year's Ina salary survey as it had a section on this compiled by agencies.
Beth:
I have had every employer (15 years as a nanny) pay my taxes and never an issue. I have also worked for people that could have serious impact on their professions if they did not pay.
Tracey:
I haven't had anyone ask me NOT to be on the books in many years. I would br highly offended. #1 redflag
Kari:
If you want to be treated like a professional act like one......
Stephanie:
Yes red flag Tracey because if they are willing to cheat the government and risk penalties of tax evasion & even losing their license to practice as a lawyer, doctor, or accountant what else are they willing to cheat on? I know the media esitmates that 80% to 90% of nanny employer's don't pay-on-the-books, but how can we know exactly if they aren't reporting?
Hilary:
should read pay their employer taxes.
Beth:
*it should be 25 years not 15!
Hilary:
Depends where u look. Yes many jobs are advertised but I dont touch them if they arent legit
Judy:
My families are all on board
Sarah:
They don't want to pay for my soc security taxes. Soooo I file a schedule C myself and pay for it myself
Hilary:
Not personally but... independant contractor (false).... Too hard ..... More $..... dont want to pay min wage
Marie:
I got the independent contractor excuse with one of my employers. I paid everything. It is a major pain to figure out all the percentages/wages because of hours. When all is said and done- it's not worth it.
Kari:
Never had an excuse
Suzanne:
Never had an excuse but I had a Mom tell me she bends over backwards for me - referring to taxes
Debbie:
Marie please tell me that's what the parents told you not how you feel 'cause I can rattle off a zillion reasons you would benefit for paying taxes. But I agree no one wants to pay taxes. I've gotten the too much paperwork excuse.
Stacey:
LOL @Suzanne! Bends over backwards huh? How about all the bending you do on a daily basis to care of her children?! hm....
Michelle Z:
I've gotten the "independent contractor" excuse, as well as: "We can't afford the taxes because business is down" (the parents were dentists)
Jennifer:
In Oregon, it takes over half of my paycheck for Taxes :-(
Monja:
In South Africa it is law to pay taxes; we can't make excuses not to pay otherwise we get huge fines or even jail time! So my boss pays my taxes!!
Brenda:
Monja it is the law here to just some people think they are above the law and wont get caught.
Leslie:
I have heard that the mom SIMPLY says,that she is not reporting it lol?!...Weird,huh?
Jordan:
The agency here poorly educates parents on the tax responsibility/benefits involved in employing a Nanny. I've also had several parents give the "independent contractor" excuse. And others just complain about the expense.
Marie:
it was the parent who gave me that excuse. I was the one who wanted a record of employment history. I worked 75 hour weeks and was paid salary based on a 40/hr week with no overtime. I am beyond grateful I got out of being a nanny when I did. I miss being around and helping with the kids (to an extent) but for the most part- I was never appreciated and was treated more as a burden than anything when I asked to be treated like a human being. I kept hearing it was too expensive for them, ect. If you can afford a nanny you can afford to pay your share of taxes so I'm not stuck paying everything.
Kathie:
When you work in someones home under their direction you are NOT an independent contractor therefore legally your employer has to pay your taxes. If more household help insisted on taxes being paid folks would not think they can get away with not paying your taxes. Also if you are not having taxes taken out you are doing yourself and your future a disservice as when it comes time to retire you will not have paid anything into Social Security.
Sarah A:
Too much hard work to sort out
in 26 years only one - and it was too much paperwork
I'm a nanny and I did get audited. The family required that I be 1099'd at the beginning of my employment, and I didnt question it. (Prior to working for them all the other families paid me cash and I was just fine with that but I needed the job and agreed)Unfortunately I am now facing almost $4,000 in taxes and penalties/interest PER YEAR of employment. I was fine with this at first, I dont mind paying my fair share of taxes. So I contacted an accountant to try to see what options I had for deductions/write offs, etc. and he said the IRS is firm that all nannies need to be W2'd...we shall see if I still have a job after my employer sees that they're going to have to pay unexpected money for the past 3 years of employment.
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