Babysitter as household employee

[Anonymous]

We use a lovely college- aged sitter on average 3 hours a week. Some weeks she’s here 5 hours, others none at all. She’s really our only sitter as she’s dependable and trustworthy and great with our three kids.

I just realized that we pay her over the IRS limit for a household employee. Do I need to be taking out taxes? We pay her $30/ hr. I guess I need to get her tax paperwork right? I guess we could diversify our sitters to stay under the limit but we really like her.

[Anonymous]

I would not.
We have a sitter 6-8x per month after school for 2-3 hours. We guarantee 3 hours. We pay cash and don’t think any more about it.

[Anonymous]

People are going to tell you you're breaking the law, blah blah blah eyeroll, but I wouldn't bother.

[Anonymous]

Of course you need to be treating her like an employee. But you already knew that and want someone to tell you to pay her under the table, which the prior two posters did, so hopefully that's enough to assuage your guilt.

[Anonymous]

Here's the rules
https://www.irs.gov/taxtopics/tc756

Note age caveat for SS and Medicare tax.
Note it's $2700 in a year.

She may not need to file taxes but might want to or already be doing that
https://www.irs.gov/newsroom/who-needs-to-file-a-tax-return

[Anonymous]

Anonymous wrote:Here's the rules
https://www.irs.gov/taxtopics/tc756

Note age caveat for SS and Medicare tax.
Note it's $2700 in a year.

She may not need to file taxes but might want to or already be doing that
https://www.irs.gov/newsroom/who-needs-to-file-a-tax-return

That is what I found when poking around. Looks like we’ll need to make her an employee and talk to our accountant about paying back taxes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Here's the rules
https://www.irs.gov/taxtopics/tc756

Note age caveat for SS and Medicare tax.
Note it's $2700 in a year.

She may not need to file taxes but might want to or already be doing that
https://www.irs.gov/newsroom/who-needs-to-file-a-tax-return

That is what I found when poking around. Looks like we’ll need to make her an employee and talk to our accountant about paying back taxes.

If you do that and she’s required to pay the employee portion of the taxes, she will very likely leave you. It’s practically unheard of for an occasional babysitter to pay taxes out of her cash wages. That’s why you pick up those gigs-you make some extra cash and move it along. No one is trying to work three hours a week (sometimes, at that) to file paperwork with the government.

[Anonymous]

I would not work for a family who would make me pay taxes. It’s a lot of extra work for her too

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Here's the rules
https://www.irs.gov/taxtopics/tc756

Note age caveat for SS and Medicare tax.
Note it's $2700 in a year.

She may not need to file taxes but might want to or already be doing that
https://www.irs.gov/newsroom/who-needs-to-file-a-tax-return

That is what I found when poking around. Looks like we’ll need to make her an employee and talk to our accountant about paying back taxes.

If you do that and she’s required to pay the employee portion of the taxes, she will very likely leave you. It’s practically unheard of for an occasional babysitter to pay taxes out of her cash wages. That’s why you pick up those gigs-you make some extra cash and move it along. No one is trying to work three hours a week (sometimes, at that) to file paperwork with the government.

Whenever I had a babysitter hit the IRS limit I would always pay the employee portion of her medicare/ SS as well. You don't have to deduct it from her wages. You do have to report the amount that you paid as income so she might have to pay income taxes on that

[Anonymous]

Just pay in cash. It is a hassle, but easier for both of you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Here's the rules
https://www.irs.gov/taxtopics/tc756

Note age caveat for SS and Medicare tax.
Note it's $2700 in a year.

She may not need to file taxes but might want to or already be doing that
https://www.irs.gov/newsroom/who-needs-to-file-a-tax-return

That is what I found when poking around. Looks like we’ll need to make her an employee and talk to our accountant about paying back taxes.

If you do that and she’s required to pay the employee portion of the taxes, she will very likely leave you. It’s practically unheard of for an occasional babysitter to pay taxes out of her cash wages. That’s why you pick up those gigs-you make some extra cash and move it along. No one is trying to work three hours a week (sometimes, at that) to file paperwork with the government.

Whenever I had a babysitter hit the IRS limit I would always pay the employee portion of her medicare/ SS as well. You don't have to deduct it from her wages. You do have to report the amount that you paid as income so she might have to pay income taxes on that

Right, so she would have to file taxes and pay money she didn’t expect to pay. You should reimburse her for that if you’re changing your agreement and she will be taking home less than anticipated. Regardless of the letter of the law, this isn’t how these types of agreements typically work. It’s likely that the trouble alone isn’t worth it to her.

[Anonymous]

I don’t think the IRS had in mind $30/hr babysitters when they came up with that. A household employee who works 3 hours a week? No way. Call her an “independent child consultant” and 1099 it, if you feel the need to report it at all. (Just kidding, don’t do that. She’d quit in a heartbeat. Just pay her cash like everyone else does).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Here's the rules
https://www.irs.gov/taxtopics/tc756

Note age caveat for SS and Medicare tax.
Note it's $2700 in a year.

She may not need to file taxes but might want to or already be doing that
https://www.irs.gov/newsroom/who-needs-to-file-a-tax-return

That is what I found when poking around. Looks like we’ll need to make her an employee and talk to our accountant about paying back taxes.

If you do that and she’s required to pay the employee portion of the taxes, she will very likely leave you. It’s practically unheard of for an occasional babysitter to pay taxes out of her cash wages. That’s why you pick up those gigs-you make some extra cash and move it along. No one is trying to work three hours a week (sometimes, at that) to file paperwork with the government.

Whenever I had a babysitter hit the IRS limit I would always pay the employee portion of her medicare/ SS as well. You don't have to deduct it from her wages. You do have to report the amount that you paid as income so she might have to pay income taxes on that

Right, so she would have to file taxes and pay money she didn’t expect to pay. You should reimburse her for that if you’re changing your agreement and she will be taking home less than anticipated. Regardless of the letter of the law, this isn’t how these types of agreements typically work. It’s likely that the trouble alone isn’t worth it to her.

OK, taxes are obligations of the employee; she should certainly know that she is "expected to pay" taxes when she earns money. If she worked at McDonalds would she expect to not pay taxes and have the rate quoted to her be the same she would earn?

[Anonymous]

I personally think it will only complicate matters for both sides if you decide to tax her $$.

You said sometimes she is not even working some weeks?

Just pay her cash + keep it simple.

If I were working less than part-time & my family told me they were going to start taking out taxes, especially for 3HR/week it wouldn’t be worth my while to stay.