Wednesday, January 09, 2008
Four Nanny Tax Myths Debunked
These tax myths keep circulating - perhaps this will help clear up the misconceptions.
Have a question about the nanny taxes? The 4nannytaxes.com FAQ is a good place to start. Feel free to leave a question or comment here too!
- Our nanny only works part time, 10 hours a week. Since she is part time I don't need to worry about the nanny taxes. If you pay the nanny $1600 or more in 2008 ($1500 in 2007) you have to pay the nanny taxes. Full time, part time, seasonal - it makes no difference to the IRS. So unless this nanny works for less than $3 per hour, YES in fact the family does have to worry about the nanny taxes.
- Our 66 year old part time nanny is collecting Social Security so we don't need to pay Social Security taxes on her wages. So wrong. Whether your nanny is 18 or 118, if you pay wages that meet or exceed the 'nanny tax' threshold, you must pay the Social Security and Medicare taxes. See Social Security Administration website.
- Our nanny is a legal immigrant. How do I fill out the forms to qualify her for the 7 year federal tax holiday? Uh, what? There is no such thing as a Federal tax holiday for citizens, permanent residents, legal immigrants, or ILLEGAL immigrants. See Snopes
- My nanny is an illegal immigrant so I cannot pay the nanny taxes. Wrong again. The IRS does not care about the nanny's immigration status. They are an equal opportunity taxing authority! Hiring an illegal immigrant violates immigration law. Failing to pay the nanny taxes is tax fraud. More about paying nanny taxes of illegal workers.
Have a question about the nanny taxes? The 4nannytaxes.com FAQ is a good place to start. Feel free to leave a question or comment here too!
