You need to get a new nanny, OP, and pay her legally. If you can't afford to pay a nanny legally, look into a share or daycare options.

Try to help her out but get a new nanny ASAP. It's not worth the risk.

For the two hundred thousandth time...paying taxes and being legal to work have NOTHING TO DO WITH EACH OTHER. You can be legal to work and not pay taxes. You can be illegal to work and still pay taxes. Paying taxes on illegally obtained income does not make it legal, does not make your immigration infractions go away and does not remove the obligations of obtaining legal status before starting work.

Here is the super-helpful 101:

- being legal to work = having immigration status that authorizes one to find unrestricted employment in the U.S. Citizens, green card holders and bearers of certain types of visas all qualify. If a visa holder, must have work authorization issued by USCIS.

- paying taxes = reporting income to IRS and paying income taxes on same. Citizens and illegals have equal opportunity to file or not file taxes. Failure to file and pay taxes is equally naughty for legals and illegals.

- special note: having a social security number does NOT qualify one to work, does not equal work authorization and has no bearing on one's immigration status.

The end.

This is precisely why parents should be doing taxes. If you pay legally, and state that upfront, you know that your nanny is legal, and you know that you can't get hit with thousands of dollars of fines and possible jail time.

http://www.gonannies.com/blog/2013/what-are-the-consequences-for-not-giving-your-nanny-a-w-2-form/
https://www.enannysource.com/ContentRevamp/articleContentR.aspx?PAGENAME=employer-tax-faq
http://www.nannyinterviewquestions.com/blog/why-you-should-think-twice-about-hiring-an-illegal-nanny/
http://blog.sfgate.com/sfmoms/2013/04/15/parents-do-you-pay-the-nanny-tax/
http://www.babycenter.com/0_legal-requirements-for-employing-a-nanny_5946.bc
http://nannybuzz.blogspot.com/2008/09/benefits-of-paying-nanny-legally-and.html
http://www.legallynanny.com/Consequences.html
http://www.nolo.com/legal-encyclopedia/risks-hiring-undocumented-nanny.html
http://www.americanbar.org/publications/gp_solo/2011/october_november/legal_pitfalls_hiring_domestic_help.html

Ask your manhattan friends if they and their friends pay cash. You'll feel better.

Anonymous wrote:You aren't convincing me you didn't know she was illegal. She was cheap and wanted to be paid in cash. You didn't ask for ID, her SS no so you could pay her SS? You are either stupid, a troll, or unbelievably naive.

Of course you knew she was illegal and you knew it was wrong to pay her under the table. You broke the law.

You aren't convincing me you didn't know she was illegal. She was cheap and wanted to be paid in cash. You didn't ask for ID, her SS no so you could pay her SS? You are either stupid, a troll, or unbelievably naive.

Anonymous wrote:If you have no intention of paying legally, even if you find someone legal to work in the US, then I suggest that you keep the nanny you have. She is unlikely to do something like file for unemployment or report you to the IRS, something a legal employee would always be able to do with few consequences to herself.

If, on the other hand, you have decided to stop being a scofflaw, then give her a generous gift, hire someone legal to work in the US, and pay your taxes. You might even help her find a lawyer to take on her asylum case.

If someone finds she is illegal and you hired her then you will be in trouble

If you have no intention of paying legally, even if you find someone legal to work in the US, then I suggest that you keep the nanny you have. She is unlikely to do something like file for unemployment or report you to the IRS, something a legal employee would always be able to do with few consequences to herself.

If, on the other hand, you have decided to stop being a scofflaw, then give her a generous gift, hire someone legal to work in the US, and pay your taxes. You might even help her find a lawyer to take on her asylum case.

Very helpful comments from all thus far. Any other advice? Thank you.

Anonymous wrote:OP here. Useful advice thanks. Could you elaborate? What are the risks I face? If I let her go (or employ her more) could I be arrested/prosecuted/etc?

She can file a complain to IRS and IMMIGRATION DEPARTMENT since you were paying cash which is illegal and I think you knew already she is illegal.

If you are uncomfortable paying illegally then you should find someone with legal employment status and be sure to pay them appropriately (taxes withheld etc...)

You can give her good notice and a wonderful reference.

You are unlikely to be arrested but there are definite risks, including:

- getting caught by the IRS and being subject to all back taxes and significant fines
- being in a riskier position should your employee ever want to take any action against you (workers comp issues, legal claims, reporting you to the IRS) - admittedly smaller risks right now while she's illegal but those things can change. What if she tries to update her status and answers questions about her employment honestly? Then you're very exposed.
- jeopardy for employment status for you and/or your husband should you ever want a job for which transparency or security clearance is required

Also, in terms of helping her, if she ever hopes to be legal to work here, and reap any of the benefits such as unemployment, social security, etc... then she will need to have her income legally reported.

I'm an MB and both I and my husband feel pretty strongly about paying people legally, so the moral/ethical arguments answered this for us even before contemplating the risks.

Only you can decide how to weigh the moral and legal issues against the costs and individuals in your situation.

OP here. Useful advice thanks. Could you elaborate? What are the risks I face? If I let her go (or employ her more) could I be arrested/prosecuted/etc?

Put your oxygen mask on first. Do not help her to the point that it hurts you.

We are new at this, and hired someone with great references to care for our young DD (aged 2). We asked what she charged, and she gave us an hourly rate we were comfortable with. We learned yesterday (after having employed her for 3 months) that she does not have legal work / citizenship status. She came to the US on a tourist visa and overstayed, and it didn't occur to us to check this before hiring her. It did occur to us that we were not paying taxes, but we considered this a "small sin", and justified it on the grounds that we have limited income and are stretched so tight now with our HHI, caring for elderly parents, etc.

So, this is the situation, and when we google the consequences of employing an "illegal", the consequences appear to be severe. We would welcome all advice about what the best course of action would be in this situation.

Adding to this is the fact that her story - the Central American catastrophe she escaped, having a young child to support, etc. etc. make us feel very compassionate towards her, but at the same time we are nervous about the wrongs we have committed and the consequences we are at risk of suffering.

Thank you.