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[quote=webbkathy][quote=Anonymous][quote=Anonymous][quote=Anonymous]One year, my bonus was taxed and it pushed my income over a certain amount and I missed out on a tax break. [/quote]

It's considered income so why would you expect otherwise?  If a bonus was tax-free, everyone would be getting minimal wages and huge bonuses.  [/quote]

I am learning that a lot of families actually do this! Or, what they do is pay the nanny "on the books" for minimum wage, and the rest off the books. This usually results in a lower hourly rate for the nanny, but more take home, and less tax liability for the parents, but they still get the child care tax credit because they're paying that much "on the books."

[b]Major downsides to this: illegal, nanny's social security account takes a huge hit, nanny can't prove income for loans, etc...[/b][/quote]

Also when the job ends, nanny either:
1. reports the TAXED part as her income and gets a much smaller unemployment benefit
2. Reports both parts - taxed and untaxed - so she can get a bigger benefit, and the family then has to answer to unemployment about what is what.

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