Reply to Do you give bonus in cash/check or though your payroll software?

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Reply to "Do you give bonus in cash/check or though your payroll software?"

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[quote=Anonymous]It doesn’t take long to search this and find the same answer over and over. A nanny is your employee. Any bonus or gift is considered taxable except in very explicit situations. You probably won’t get caught but it is certainly illegal and you could incur a penalty. People saying if it’s less than $5-$8k then it’s fine should be explicit about what fine means—that you won’t likely be caught but that you aren’t following the law.

“Any wages, including bonuses, are considered taxable income, even if you pay in cash.  This means you can and should include the amount in your own annual tax filing and you should advise your nanny to note it as income in his/her tax filing to avoid any trouble with the IRS.

Lest you think you can simply give your nanny a tax-free gift in lieu of a bonus, think again.  Because your nanny is your employee, any item of cash value is deemed compensation, and is therefore taxable.  If you wish to avoid taxation, you could choose to pay directly for schooling, medical expenses, health insurance, a cell phone, or other tax-free gifts instead of offering cash as a bonus, but considering your nanny may rely on that extra cash around the holidays, you may just want to add it to his/her final check each year, regardless of taxation.”

https://nannifiedlife.com/bonuses[/quote]

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