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Childcare other than Daycare and Preschool
Reply to "Help! Summer nanny payment method?"
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[quote=Anonymous]First question - How much do you expect to pay her over the summer? There’s an IRS threshold, and if you’re below that for a quarter, you can pay cash. But it’s pretty low, like $2k. If you go this route, you can do venmo, checks made out to cash, cash, whatever. If she’s giving full time childcare for a summer, you’re going to be over the threshold, legally you are supposed to pay taxes as a household employer. Any of the nanny tax services are fine. Note that if you offer, say, $25/hr, you will end up paying more like $27/hr because of taxes. And note that she will net like $22/hr - she just needs to be aware. The second question is are you planning on claiming the childcare payments for tax credit on your taxes? If you are, you’ll need her SSN so best to do it legally via a nanny tax service. I hate employers who try to take the best of both worlds - pay under the table but then claim the tax credit, thereby throwing the nanny under the bus (by reporting her income to the IRS). Many, many, many people pay their childcare workers under the table. You’re not alone if you do. She may prefer it, since she nets more under the table. The flip side is that she’s not showing earned income, which is important for things like social security. I am a tax person so I would not do it, and I’m not encouraging you to do it, but it’s something A LOT of people do, especially for temporary summer gigs. [/quote]
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