My new employers....

[Anonymous]

My new employers want to 1099 me at the end of the year. Am I right in thinking that this is not allowed and not how nanny taxes are done? How do I explain this to them? They don't seem to want to hear that they can't do it. I'm still doing research, but from what I've read nannies are household employees not contractors. I really like the job, but I want to make sure taxes are done correctly. Any help is greatly appreciated. Thanks!

[Anonymous]

Show them this link:
http://www.irs.gov/publications/p926/ar02.html#en_US_2012_publink100086722

It's from the IRS publication 926 the household employer's tax guide. It will show them that a nanny is classified as a household employee not an independent contractor and her taxes should be treated as such. They are just trying to get out of paying their share of the taxes, and they can't really argue with an IRS publication.

[Anonymous]

Thank you!

[Anonymous]

Nannies are always considered household employees not independent contractors. They may honestly believe that nannies can be ICs. I was very surprised when we called the IRS helpline for a question on the taxes and the person on the IRS PHONE said nannies can be considered IC and referred us to the wrong documents. The IRS person on the phone was dead wrong but this misconception is out there.

All you can do is say no but you should do this. Your taxes will be 7.5% higher if you file as an IC.

[Anonymous]

Be prepared that they may decide it's too much trouble or expense and fire you to look for someone who will work under the table once they realize they can't legally 1099. Paying legally adds another 10% to their costs (FICA and unemployment ins) even if they don't do the also legally-required workman's comp. If they've only planned on your flat rate, they may not be willing to do it.

This doesn't make it right or legal, and you are right to ask for the change, but it's not just a matter of paperwork and may make them rethink the job. Hopefully they're just clueless, and they'll correct it instead.

[Anonymous]

Op here and I guess I am just getting really frustrated. This is the only job I have interviewed for that the people would even consider paying taxes and now they are doing this. I'm in an area where it is more common to pay under the table.

[Anonymous]

So many parents are into taking advantage of nannies. It's really horrible.

[Anonymous]

So I talked to the parents again and showed them several printouts on the topic and they seemed to understand and said they would talk it over. I just hope they don't reconsider hiring me.

[Anonymous]

Can't you just file your share of the taxes out of the money they pay you, and take care of the taxes on your end at least? They would still not be doing their end, but if they were to get caught then it would be their fault and they would realize that they should have just gone the tax paying route to begin with.

[Anonymous]

you can pay you part of the taxes. At the end of the year the IRS will collect the parents share…. You will have to keep very good records of your time and proof of payment. Insist they pay you in check if they want you to 1099 yourself though. Cash has no paper trail

[Anonymous]

OP, have they been withholding your FICA tax? If so, they can't just decide not to pay it. If not, did you realize what was happening after your first paycheck? Just a little confused.

Basically, if they have been withholding, they have no choice but to give you a W-2 and pay it to the IRS. If they haven't been withholding, you should have addressed that right away (unless they are really new, like this was your first paycheck!)

If they haven't been withholding, your options are to file with a 1099. It won't get you into any trouble, but it will cost you extra money. Or, to file as if you should have been issued a w-2. In that case, you will come out ahead, as your employers will be on the hook for everything. If you want to keep the job (or need to) I wouldn't do that. But you are legally (And i think morally) entitled to.

[Anonymous]

Pp here with one other thing. You really can't just pay your share. You either file an incorrect 1099 and pay everything or you file as a missing w-2 and the parents are stuck with the whole bill. Once they fail to deduct FICA, that ship has sailed. There is no way for a w-2 employee to pay fica directly and they can't retroactively withhold it.

[Anonymous]

I haven't gotten a paycheck yet, today was my first official day. They said they would figure it out by the end of the week.

[Anonymous]

I would file as missing w-2 and make the parents pay if it comes down to it. When you say you want to pay on the books, you mean LEGALLY on the books. Parents need to learn that they can't cheat the system or you with taxes. If it means the IRS coming after them for money then so be it. They will also find it harder to cheat with future nannies as I am sure if you are caught not paying taxes that they will keep a closer eye on you in the future in case you try to do it again. Or at least that is what people might think and so it might scare them into doing things properly from then on.

[Anonymous]

OP, if you're in an area where the parent pool isn't terribly educated about the tax/legal issues they may be perfectly well-intentioned but over-whelmed and nervous. (Speaking as someone who was in this boat a year ago.)

You could share w/ them some references like nannytaxes.com and mybreedlove.com - both of which have great info and also really good customer service people who can help walk them through the process. If money isn't a huge obstacle they can use a service like this to administer all of the payroll/tax deductions/quarterly and year end filings, etc... and it will take a HUGE load off their minds.

Good luck!