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Reply to "Do most nannies pay taxes?"
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[quote=Anonymous]Are you in DC? Paying off the books is pretty unusual here; the market supports on-the-books pay because so many people are Feds/want to keep open the possibility of being Feds/etc. It is legally permissible to under-deduct relative to her projected income tax owed as long as she fills out the paperwork; hell, she can even write "EXEMPT" and pay nothing except medicare/SS upfront. Once she does that, you're in compliance and her follow up is her problem; that said, you do need to file the W-2, so the government will know about her income, so if she doesn't pay, she could definitely get in trouble now or down the line. That said, most people in the nanny pay category get a refund unless they have something else going on (just based on standard deduction), so claiming an extra exemption to balance that out has worked for my nannies in the past (i.e., they have actually followed up and found that they either owed a very small amount or were owed a very small amount after adding one exemption on each of the Fed and DC forms).[/quote]
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