Risks of paying off the books

[Anonymous]

Not a fed. What are the risks here? I’m getting ghosted by a lot of people once I mention that I want to pay on the books. Others start demanding much higher rates.

[Anonymous]

For them - tax fraud is huge if they don't account for their income. They also have to pay a higher tax rate to be 'self-employed'. Off the books also tends to have 'looser' contract terms. Will you even give them an employment contract? How will they enforce employment terms like sick leave, OT, and health care? What happens if you decide to just quit using them 2-months into a 1-year agreement?

For you - tax fraud and future employment security claims if someone finds out https://en.wikipedia.org/wiki/Nannygate

[Anonymous]

They're wanting higher rates because they will pay taxes and social security and therefore bring less home. A friend of mine wanted this arrangement to watch my kids and I wasn't comfortable with it so I found other childcare. I imagine fines and back taxes would be the typical punishment if you're caught, but I'm not sure.

[Anonymous]

I have always wondered how the IRS doesn't catch this kind of tax fraud- how stupid are they? I mean 20/hr is 40k a year. You're not paying in physical cash, you're still writing checks, wiring money or venmo. There's a huge paper trail.

[Anonymous]

Anonymous wrote:I have always wondered how the IRS doesn't catch this kind of tax fraud- how stupid are they? I mean 20/hr is 40k a year. You're not paying in physical cash, you're still writing checks, wiring money or venmo. There's a huge paper trail.

They catch it when you flaunt it and someone rats on you (posting lots of vacation pics with nanny while the neighbor 3 houses over knows you aren't paying her above board) or you become a big deal in the news - through crime (Derek Chauvin was busted for tax fraud only after he murdered someone on social media) or political/business infamy (the Nannygate/Trump effect).

Basically people who keep their head down are fine. The IRS isn't checking everyone's bank accounts.

[Anonymous]

The thing I would worry about is when something goes wrong. If you're paying off the books, you're also presumably not paying Workers Comp insurance, which is required in DC. Well, what happens when the nanny falls and breaks a bone? Not exactly out of the realm of possibility when you're taking care of kids all day. Particularly if she doesn't have health insurance, she's going to report this as an injury on the job, and they're going to come to YOU for the money, and then can get you on all sorts of things.

What if she decides to file for unemployment after you no longer need her? Again, they're going to come after YOU the employer for this stuff, NOT her. Paying your employees off the books is a much more serious crime than accepting payment off the books, and there are lots of situations where it would be advantageous for her to essentially rat you out.

That being said, it's not uncommon for people to give "discount" so to speak for people who will pay off the books because they avoid the taxes. But I'd insist.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have always wondered how the IRS doesn't catch this kind of tax fraud- how stupid are they? I mean 20/hr is 40k a year. You're not paying in physical cash, you're still writing checks, wiring money or venmo. There's a huge paper trail.

They catch it when you flaunt it and someone rats on you (posting lots of vacation pics with nanny while the neighbor 3 houses over knows you aren't paying her above board) or you become a big deal in the news - through crime (Derek Chauvin was busted for tax fraud only after he murdered someone on social media) or political/business infamy (the Nannygate/Trump effect).

Basically people who keep their head down are fine. The IRS isn't checking everyone's bank accounts.

This. Or when the employee wants official income for something like a car or house loan. We always paid on the books and taxes.

[Anonymous]

The IRS is a ghost town.

But, OP, you should be paying people properly. It probably does mean a higher rate. Do the right thing. Be a good employer.

[Anonymous]

Just pay the higher rate. It’s a foolish economy to do otherwise. My assumption is that only not-legal-to-work persons get paid cash under the table.

[Anonymous]

Anonymous wrote:The IRS is a ghost town.

But, OP, you should be paying people properly. It probably does mean a higher rate. Do the right thing. Be a good employer.

Sounds like OP wants to pay ON the books but prospective sitters don't want her to.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The IRS is a ghost town.

But, OP, you should be paying people properly. It probably does mean a higher rate. Do the right thing. Be a good employer.

Sounds like OP wants to pay ON the books but prospective sitters don't want her to.

DP. Oh hmm, yeah I missed that.

[Anonymous]

My neighbor's 19yo DD works as a nanny while she is home from college this summer. It is more like a mother's helper to a SAHM of 4 young kids. She is paid @ $100 a day "cash" to keep them company, take them to the pool and park and put the babies down for naps. She works 7 hours, 4 days a week M - Th.

I don't know for sure, but I would bet that she is not going to pay taxes on it. Her mom told me like it was a good thing that she has a "fun" job and is making so much more than she made previous summers.

My DD works retail at a local shop and makes $11 an hour. She does 6 hour shifts, 5 days a week, and is bring home HALF. I know it's wrong, but I would allow her to do somethinglike this nanny thing (off the books) she could find it.

[Anonymous]

Anonymous wrote:My neighbor's 19yo DD works as a nanny while she is home from college this summer. It is more like a mother's helper to a SAHM of 4 young kids. She is paid @ $100 a day "cash" to keep them company, take them to the pool and park and put the babies down for naps. She works 7 hours, 4 days a week M - Th.

I don't know for sure, but I would bet that she is not going to pay taxes on it. Her mom told me like it was a good thing that she has a "fun" job and is making so much more than she made previous summers.

My DD works retail at a local shop and makes $11 an hour. She does 6 hour shifts, 5 days a week, and is bring home HALF. I know it's wrong, but I would allow her to do somethinglike this nanny thing (off the books) she could find it.

They might not be hitting the minimum threshold for domestic worker (somethng like 30k a year in md) so technically don’t have to but also your daughter is getting ss and unemployment stocked away which may come in handy later. I really worry about retirement for the lifetime off the books nannies. There are too many employers willing to screw them over.

[Anonymous]

Even DCUM is not completely anonymous...! But i think the PP was right when saying that it mostly comes out if something goes wrong, The Nanny is injured in your home. The Nanny gets into a car accident with your kids or in your car.

[Anonymous]

People who pay off the book should be prosecuted and serve prison time as well as those who want to be paid off the books. But they are probably undocumented and can be expelled.