Dependent Care Flexible Spending account and under the table nanny

[Anonymous]

Looking for some advice. I enrolled in dependent care spending account via work to contribute $5k/ year. However my child who is 8 months hasn't gotten a spot at any daycare and now we are doing a nanny who wants to be paid in cash under the table.

She comes with very strong recommendations so we want to use her.

I realized I can't use the dependent care account amount to pay her. Nor will my contribution carry forward.

Is there anyway for me to reuse that $5k

Thanks

[Anonymous]

No

[Anonymous]

Also, don't pay in cash under the table. It's illegal.

[Anonymous]

Does “20,000 new IRS agents” mean nothing to you? GL!

[Anonymous]

If your nanny sets-up her own 1099 (i.e she pays her own taxes), you can use that dependent care money.

[Anonymous]

Anonymous wrote:If your nanny sets-up her own 1099 (i.e she pays her own taxes), you can use that dependent care money.

Not true in the long run. Nannies are not 1099 independent contractors. They are w2 domestic employees so OP would still be on the hook for back taxes plus fines for not withholding ad paying into the employer's tax responsibilities.

[Anonymous]

Anonymous wrote:If your nanny sets-up her own 1099 (i.e she pays her own taxes), you can use that dependent care money.

Also if you are going to evade your employer taxes by doing this, please please please sit the nanny down and tell her in detail that you are paying her whatever, let's say $20hr cash, but you are having her sign this form to say that she is going to be responsible for both employer and employee taxes so you don't have to pay anything, and that she should set aside 15-20% of her wages because she will get a big tax bill at the end of the year. Make it very clear that she should live as she is only making $17hr. Hitting an hourly domestic worker with that kind of tax bill at the end of the year is cruel.

[Anonymous]

The way around this is to have your nanny sign/attest that they worked for you, rather than providing documentation when you request your dependent care funds. I always did this, rather than providing proof because every year, there was an issue with the documentation I provided.

Caveat, my nanny was paid legally, so if there was ever an issue/audit, I had pay stubs/proof (but this never happened).

[Anonymous]

Anonymous wrote:

Anonymous wrote:If your nanny sets-up her own 1099 (i.e she pays her own taxes), you can use that dependent care money.

Also if you are going to evade your employer taxes by doing this, please please please sit the nanny down and tell her in detail that you are paying her whatever, let's say $20hr cash, but you are having her sign this form to say that she is going to be responsible for both employer and employee taxes so you don't have to pay anything, and that she should set aside 15-20% of her wages because she will get a big tax bill at the end of the year. Make it very clear that she should live as she is only making $17hr. Hitting an hourly domestic worker with that kind of tax bill at the end of the year is cruel.

Bruh. She ain't gonna pay her taxes at the end of the year.

Anyone wanting to be paid under the table is doing so for 2 reasons: 1) they are illegal or 2) they don't want to pay taxes/let anyone official know how much they are making.

My ex-DH would mostly seek out under the table security type jobs (bouncer, bodyguard, etc.) to keep his W2 reported income as low as possible. Why? So the POS wouldn't have to pay a decent amount in child support. I got $19/month for our kids. F#*ing loser.

He learned that from his uncle who only worked cash jobs to avoid paying a judgement against him.

[Anonymous]

Anonymous wrote:Looking for some advice. I enrolled in dependent care spending account via work to contribute $5k/ year. However my child who is 8 months hasn't gotten a spot at any daycare and now we are doing a nanny who wants to be paid in cash under the table.

She comes with very strong recommendations so we want to use her.

I realized I can't use the dependent care account amount to pay her. Nor will my contribution carry forward.

Is there anyway for me to reuse that $5k

Thanks

Don't do this.

[Anonymous]

Don’t do under the table. Employers who are willing to do this almost always take advantage of it too and not pay their share of taxes, not pay overtime, no buy into workers comp, and not pay sick or vacation.

Just don’t. Do the proper thing. If u can’t, I can’t afford a nanny and just stay home.

[Anonymous]

We did this out of necessity during the pandemic with a friend’s (legally paid) nanny. No you can’t use FSA dollars. Your choice is either to eat the FSA contribution and claim the credit, or find a licensed nanny or in-home daycare without a long waitlist.

[Anonymous]

See if you can educate her and problem solve to bring her on legally (you pay payroll taxes for instance to bridge a money gap). Otherwise look for someone else.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If your nanny sets-up her own 1099 (i.e she pays her own taxes), you can use that dependent care money.

Also if you are going to evade your employer taxes by doing this, please please please sit the nanny down and tell her in detail that you are paying her whatever, let's say $20hr cash, but you are having her sign this form to say that she is going to be responsible for both employer and employee taxes so you don't have to pay anything, and that she should set aside 15-20% of her wages because she will get a big tax bill at the end of the year. Make it very clear that she should live as she is only making $17hr. Hitting an hourly domestic worker with that kind of tax bill at the end of the year is cruel.

This is not how it works. The employer is responsible for paying its portion of the taxes; you cannot shift that liability to the employee

[Anonymous]

Anonymous wrote:Looking for some advice. I enrolled in dependent care spending account via work to contribute $5k/ year. However my child who is 8 months hasn't gotten a spot at any daycare and now we are doing a nanny who wants to be paid in cash under the table.

She comes with very strong recommendations so we want to use her.

I realized I can't use the dependent care account amount to pay her. Nor will my contribution carry forward.

Is there anyway for me to reuse that $5k

Thanks

So you are fully aware that this person is eager to break the law for their own benefit, and you want them to care for your child?