Does anyone ever actually get caught paying a nanny under the table?
![[Post New]](/nanny-forum/templates/default/images/icon_minipost_new.gif){kind=icon}
Anonymous
|
My husband and I are legal when paying our nanny (a US citizen) - we pay and report taxes. However, three of our friends that have nannies pay them under the table and have no concerns about getting caught. One friend specifically said that her nanny wouldn't work for her otherwise because she wouldn't make enough money.
On one hand, I feel bad that our nanny's $19/hour salary (for 2 kids) turns into like $12-13/hour after taxes, meanwhile our friends' nannies pocket $18/hour and don't report. BUT on the other hand I would not want to get caught as we are govt employees. What would be the penalty? Have you ever known anyone in real life to get caught doing this? It seems like everyone gets away with it. How can you lose $30+K per year (nanny salary) and not get audited by the IRS?? |
Anonymous
| In my area almost everyone pays their nannies under the table. As a nanny myself I find it difficult to find a family to work for because I want to be able to prove my income. Most people I know just pay their nannies in cash. When they get paid at work they just cash out part of their check for the nanny. I guess that way the IRS really can't trace it as long as the family has no other ties to the family and there really isn't a way to prove the family even has a nanny. |
Anonymous
|
Zoe Baird. I think that's where all the paranoia comes from around here. Keep in mind that while taxes reduce your nanny's salary, she, like everyone else gets benefits from her taxes, very notably including the ability to collect Social Security when she retires. If she is lower income, particularly if she has kids, she may get much of the taxes back through the Earned Income Tax Credit, but she has to pay taxes on her income to get that.
|
Anonymous
|
If the families are smart about it they would pay the nanny cash and have no contract or written document stating the nanny works for them. By each parent cashing out part of pay checks the IRS wouldn't be able to track it unless the nanny filed without them and had some proof she worked for them.
As a nanny you have to be careful about depositing large sums without proof of income. You should pay for as much as possible in cash and probably keep a small part time job on the books. If you get audited you're fucked. It's easier if the nanny is married that way she can claim her spouse supports her. |
Anonymous
|
Zoe Baird and Kimba Wood. Although Wood did not technically break the law, the whole nanny gate scandal damaged her career as well by close association.
All employers should insist on paying on the books and all employees should insist on being paid legally. Not only because it's the law, but because the penalties of getting caught, and the disadvantages of not having proof of salary, are too high on both sides. |
Anonymous
|
I can think of several ways you could caught doing this. You get divorced, and your financial records are subpoened and also to claim childcare as part of child support, you have to produce documentation of the cost to the other party or the court.
I can't see how you could use Flex Spending Account without producing the Nanny's name and tax id number. Do you have to document anything to use that other childcare tax credit you can claim on your tax return? Not sure how that one works. |
Anonymous
|
If you ever want a high profile job, you can't afford to do this. But for common folk (although the PP's comment about the divorce issue is a fair point), you probably can get away with it just fine.
We had part time nannies that we paid in cash. We have also had part time nannies that we paid "properly" per tax guidelines. Now we have an au pair and that's all regulated by the government, so different thing. |
Anonymous
| I worked for a family who divorced and can say first hand the tax issue doesn't come up, or at least it didn't for this family. |
Anonymous
| You're most likely to be caught if you fire or lay off the nanny, she isn't able to get another job right away and files for unemployment. If she can prove she worked for you, time sheets, contract, emails, texts etc she will win. If you let your nanny go be damn sure you give a good reference and bust your butt to make sure she has another job lined up. |
Anonymous
|
Actually, PP, both sides will be punished in the case you describe. Both are responsible and both will have to deal with back taxes.
Divest yourself of the notion that nanny has more power in this situation. Both of you break the law. Both of you pay the price. All the more reason to insist on being paid legally. |
Anonymous
NP but that's not really how it works. Nanny would be liable for her own personal income taxes, but like others have said her tax bill is likely low, and there's nothing to stop her from reporting the income just because you aren't. If an employer fails to withhold FICA, they become responsible for both halves. Sorry, but the employer really does have much more to lose in this situation, and a savvy knowledgeable nanny can really screw you if you give her a reason. |
Anonymous
|
It's not just taxes if you get caught. Fines for breaking laws... It's a misdemeanor and a fine for an employer not having workers compensation.
I do think if you're 'ordinary', it's not a high probability but I'm the type of person that doesn't like that hanging over my head. One wrong step, one person has it in for you and they can report you. And there's always the chance of a random audit. Divorce is only an issue when it's a nasty one - if the other side is looking to make trouble for you, reporting you to the IRS would be simple. |
Anonymous
|
I think the only way you can get in trouble is if you leave any type of paper trail.
If you pay your nanny in personal checks, but still do not report it on your taxes, then that may come back to bite you in the ass, most esp. if your bank shows you wrote out these checks to a certain person on a regular basis. Also if you have a verified written contract that is signed by both you and your nanny. However, in reality no one really ever gets caught and thus prosecuted by the IRS for paying a nanny off the books, except those in the limelight. I.e., politicians, celebrities, athletes, etc. Even if you were to be audited by the IRS, it would be tough for them to prove that you were paying someone under the table as a working nanny unless you has a signed contract. Just the regular personal checks would not be sufficient proof that you were paying a nanny unless you actually wrote "Childcare" on the checks themselves. |
Anonymous
That is absolutely untrue. People get "caught" all the time, it's just that it isn't newsworthy. Being caught has mostly financial implications. The employer becomes responsible for 100% of FICA (whereas if they had been withholding, it would be split 50/50 between the employer and employee), back unemployment taxes, fines, etc. |
Anonymous
| When looking at Nanny ads ............ What does DOE mean ? |