Payment structure for nanny share
![[Post New]](/nanny-forum/templates/default/images/icon_minipost_new.gif){kind=icon}
Anonymous
|
We're about to start a nanny share with another family, and all of us want to do everything on the books, and completely legally. Among other things, I've heard that the IRS requires that BOTH families have to create a corporation (with an EIN, quarterly filings, etc) and each pay the nanny separately. This seems like a huge headache. Does anyone know why we can't legally just have one family create the corporation, file the reports, pay the taxes, etc and then the other family (mine) would reimburse them for half of everything?
My work doesn't have the option of a childcare flex spending account, so that's not the issue. To avoid audit problems, we could ask the host family to give us copies of all of the paperwork that they submit to the IRS, DC government, etc. What am I missing--why can't we legally just reimburse the other family? Or can we do this as long as we don't claim the childcare expenses as a deduction on our income taxes? |
Anonymous
| Stop being lazy. You are both her employers, and you both have responsibilities. It isn't fair to your share family to put the burden of all the "work" on them. If that isn't enough motivation, are you comfortable giving up your authority as an equal employer? If they're writing her checks, who do you think she will view as her "real" employer? |
Anonymous
|
Because as the employer, you have the legal responsibility to set yourself up as just that -- the employer.
Would it be legal for your employer to funnel your pay through the 7-11 down the street? |
Anonymous
| It's the law. Sure, it is a pain in the ass, but if you do it the way you've described, not only are you circumventing the law, but you are making the other family circumvent it as well. Just hire a payroll service. We've used Breedlove., definitely recommend them. |
Anonymous
|
I know being an employer, doing taxes sounds like a headache, but it is actually not. There are threads here, outlining all the steps from DIY folks to different options of companies that provide service. It is really not that much work, after initial research of 1 day and maybe a day total in getting the FEID, setting up state accounts, I spend approximately 15 min a month on the book keeping/state taxes and about 5 hours per year on getting W-2, annual wrap up, etc.
What if the other family wants out of nanny share? What if they make a mistake? Childcare tax deduction is worth at least $500, why would you want to leave money on the table? |
Anonymous
|
In all honesty, paying a nanny on the books can be quite a headache.
You are taking on an add'l job in itself. Employer. Unless you are willing to become an employer of another person, then having a nanny may not be the right choice for your family. Or you can just pay her in cash every week. That is much easier for many families. |
Anonymous
|
I don't actually think you have to create a corporation. Some people do, for various reasons, but you can pay a nanny without it.
I would consult a professional or a payroll service, rather than going by what you've randomly heard. |
CPPatGTM
Member Offline
Member Offline
| What you've heard is true -legally you are both considered employers and would be setup separately with tax identification numbers and be responsible for tax filings. Your employee would receive two W-2s at the end of the year- one from each family. You are both compensating the employee and have control over her performance and duties. If you do some additional research, you'll see that is the case. |
Anonymous
| We do everything through Breedlove--called My Home Pay now. There are fees to use them, but it's worth it to us. They do all the paperwork and taxes for you. When I file my taxes (I do them myself) it's really easy to just plug in the numbers they give me. |
nannydebsays
Member Offline
Member Offline
| OP, in your shoes I would be concerned that you would not qualify for any childcare tax credits since you would not have IRS approved records of your childcare expenses. |
Anonymous
You are a terrible person. |
Anonymous
| It is really not that complicated to set up an employer ID. You should hire a tax company like GTM payroll services - each family can do so. It will be much less complex if you both pay taxes separately, trust me. The hard part is finding a good share and agreeing on what to pay the nanny (for 2 kids, around $20-$25 an hour is typical). Most nannies work more than 40 hours a week - so it would be 40 hours plus OT. If paid on a bi-weekly basis, each pays once a month and taxed on the amount you pay the nanny. |
Anonymous
| Where do you live? |
Anonymous
| Op for the first year you should just use a service to set you up. Once you are registered it is much easier to just replicate Things going forward than to start from Scratch |