$600 write-off. Am I missing something

[Anonymous]

We had our taxes done in March and I was excited to see our tax liability decrease between having a baby and paying for childcare. We were paying about $2k per month to the sitter - not taxed. Though we are paying appropriate taxes now. But we were only eligible for a $600 write off.

My question is this, other than the moral, legal obligations to pay the taxes and therefore a payroll company, what is the value in my embracing this expense and my civic duty to only get a paltry write off for spending $26k a year on child care. I know about the dependent care option, but $5k tax free savings isn't a lot of $$.

I just want to make sure I'm not missing some benefit that is out there.

[Anonymous]

You mean you're checking to see if there's some benefit for you, right? Not one for your nanny?

[Anonymous]

You are an employer. Like your own employer, you need to follow the laws meant to protect employees and pay into our tax system.

If you don't do things legally, your nanny does not get any "credit" toward social security or medicare. It's like she never worked. Would that be ok with you for your job?

Also, you always risk getting audited or sued by your nanny at some point.

[Anonymous]

Well, OP -- how would you feel if your employer decided not to pay you on the books and withhold taxes? How would that impact you?

[Anonymous]

Anonymous wrote:Well, OP -- how would you feel if your employer decided not to pay you on the books and withhold taxes? How would that impact you?

Nope, you are not missing anything. You have discovered that the primary benefit of following the letter of the law is that sense of moral uprightness you get to feel every day. Sorry OP, it is not a better route financially. You save more off the book and your nanny makes more then her social security payments would be.

[Anonymous]

did not intend to quote PP there, my apologies.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Well, OP -- how would you feel if your employer decided not to pay you on the books and withhold taxes? How would that impact you?

Nope, you are not missing anything. You have discovered that the primary benefit of following the letter of the law is that sense of moral uprightness you get to feel every day. Sorry OP, it is not a better route financially. You save more off the book and your nanny makes more then her social security payments would be.

The primary benefit is *not* a sense of moral uprightness.

Your nanny has no credible employment history or credit history if she is not paid on the books.

PP, how would it impact your life if your employer decided to start paying you off the books?

[Anonymous]

Anyone who has followed the news in the last two years must know that social security will probably not exist for today'syoung workers, no matter how much they pay in taxes. Some facts from the Pew Research Center:

"The young today are paying taxes to support a level of benefits for the old that they themselves have no prospect of receiving when they become old.”

"Although the average 25-year-old will pay out almost $26,000, the net tax bill for the boomer generation is an eye-popping $420,000."

"Absent any changes to the system, virtually all millennials will get back less in benefits than they contribute in taxes"


I am with OP. I will take my pay off the books. The rest of you may be able to feed yourself on the warm tingly feeling of moral prightness but I am going to need something more than that to avoid cat food dinners.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Well, OP -- how would you feel if your employer decided not to pay you on the books and withhold taxes? How would that impact you?

Nope, you are not missing anything. You have discovered that the primary benefit of following the letter of the law is that sense of moral uprightness you get to feel every day. Sorry OP, it is not a better route financially. You save more off the book and your nanny makes more then her social security payments would be.

The primary benefit is *not* a sense of moral uprightness.

Your nanny has no credible employment history or credit history if she is not paid on the books.

PP, how would it impact your life if your employer decided to start paying you off the books?

More money, more freedom, more privacy, more choices.

What was your point here again?

[Anonymous]

Anyone who has followed the news in the last two years must know that social security will probably not exist for today'syoung workers, no matter how much they pay in taxes. Some facts from the Pew Research Center:

"The young today are paying taxes to support a level of benefits for the old that they themselves have no prospect of receiving when they become old.”

"Although the average 25-year-old will pay out almost $26,000, the net tax bill for the boomer generation is an eye-popping $420,000."

"Absent any changes to the system, virtually all millennials will get back less in benefits than they contribute in taxes"


I am with OP. I will take my pay off the books. The rest of you may be able to feed yourself on the warm tingly feeling of moral prightness but I am going to need something more than that to avoid cat food dinners.

Responsible people pay taxes as required by the law. Morality is nothing to do with it. It's the law and I hope you get caught one day for breaking it willingly.

[Anonymous]

I'm an MB and I pay on the books because it is illegal not to BUT if I had the option to be legally paid without having social security etc taken out of my paycheck I would absolutely take the money now to forgo social security later and to not have unemployment benefits. As a previous poster said, we are unlikely to receive social security benefits later and even if we did, the money I could save now would outweigh whatever I got later.

[Anonymous]

I'm the OP.

I would pay the same in both scenarios. So my expense is the same (except for what fees I pay Breedlove). Yes, I must do the moral and legal thing. I don't really know what her SS benefits would be as a Green Card holder, though I've had encouraged her to obtain citizenship so she can vote and collect SS later in life.

This was more about the tax benefit. I guess I was just shocked that between just having the dependent write-off and the child care expense, it amounted to a $600 write off. Kids ARE expensive!! Ha.

[Anonymous]

Anonymous wrote:I'm the OP.

I would pay the same in both scenarios. So my expense is the same (except for what fees I pay Breedlove). Yes, I must do the moral and legal thing. I don't really know what her SS benefits would be as a Green Card holder, though I've had encouraged her to obtain citizenship so she can vote and collect SS later in life.

This was more about the tax benefit. I guess I was just shocked that between just having the dependent write-off and the child care expense, it amounted to a $600 write off. Kids ARE expensive!! Ha.

Why would you pay the same? You wouldn't have to match the FICA payments ...

[Anonymous]

"This was more about the tax benefit. I guess I was just shocked that between just having the dependent write-off and the child care expense, it amounted to a $600 write off. Kids ARE expensive!! Ha."

I will 100% commiserate that it is ridiculously insane that you can deduct mileage for your job from taxes but can deduct virtually nothing (5K is certainly nowhere near the real cost) of childcare expenses. Tax code is set up for SAHP families and generally screws udal working parent families. That is just the reality.

[Anonymous]

Why would you pay the same? You wouldn't have to match the FICA payments ...

I pay the same flat rate per week. When I went with Breedlove her net pay decreased. My out of pocket is the same.