Question about taxes. Hoping someone can help
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Anonymous
| I currently work for a family that wanted to pay me legally but didn't really follow the proper protocol for having a household employee. Therefore, nothing was ever withheld from any of my paychecks. They tried to 1099 me out of ignorance, I believe, but I put a stop to that quickly due to the advice ive seen on this bored. I figured I would have to pay income tax at the end of the year and so did they. After I researched a bit I let them know they should have been paying social security and Medicare throughout the year. They realized their mistakes and are trying to right their wrong with the IRS. They are going to pay for my half of those taxes. Here's where it get a little tricky for me .They are saying that I have to add the money they are paying for my taxes as my taxable income. Does this sound fair? Technically I didn't make that money and if they actually withheld that tax my taxable income would be lower. If anyone has some insight that would be great before I go talk with the IRS. Sorry I know this isn't a tax forum but I'm really hoping since you employers deal with this a lot you might have some input . Thanks! |
Anonymous
| I would check with the IRS on this one. I beleive that FICA tax is a special case, and your employer can pay your portion without additional tax burden to you. That's definitely not the case with income tax. |
nannydebsays
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| Check with the IRS and with HomeWork Solutions as well. |
Anonymous
| Call the IRS, they are surprisingly helpful. However--I think your employers are trying to take advantage of you here, maybe not intentionally, but what they're saying is incorrect. It is the EMPLOYER's responsibility to withhold taxes (FICA) from your paycheck. If they fail to do this then THEY HAVE TO PAY THEIR PORTION AS WELL AS YOURS! This is NOT taxable income, it is TAX! I speak from experience, we briefly had a nanny and couldn't figure out all the tax stuff (it really is very complicated) and so didn't withhold anything for the couple of months she worked for us. We were then stuck paying both our responsibility and hers. Prior to hiring someone long-term we made sure to do our homework and also gave her a written contract explaining all of this, and got a software program to help us ALL by printing out paystubs showing her income and tax that was withheld. Good luck, OP--I hope they will do right by you! |
Anonymous
| If they pay your portion of income taxes, that is income to you. FICA taxes may be different; I'd check with the IRS. |
Anonymous
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They are correct. If they pay your portion of the taxes, but don't withhold them, then that money becomes additional income to you, and income tax is due on it. The IRS is very clear about this: you cannot pay an employee's taxes (FICA or income tax) for them without counting it as income.
The only other alternative is that you pay them back the FICA they neglected to take out of your checks. You could also ask them to pay the additional income tax on that amount for last year since it was their mistake; it's got to be a tiny amount (whatever 25% of 5.35% of your income was at most). You will owe income tax on that additional amount, too, but it will be even less. Probably just a couple of dollars. |
Anonymous
| Agree with 10:03 - if they pay your share of FICA, the amount they pay is income to you. |
Anonymous
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I suggest checking with the IRS, but I think FICA is the only exception to that taxable income rule. It is my understanding that if they fail to withhold your half, they are responsible for paying all of it.
If they were also "paying" your federal withholding, that would be considered taxable income. |
webbkathy
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This is only partially correct. An employer can pay your portion of FICA - however they must include the employer paid employee FICA in your wages subject to income taxes (Federal and State) on your W-2 form - you do pay income tax on the employer-paid-employee-FICA. Please see Publication 926 p. 7 Not withholding the employee's share. |
Anonymous
Thank you! |