I have no idea what the actual statistics are, and like a PP said, it's probably impossible to get a good estimate, but I can tell you that we use a CPA in Bethesda to do our annual taxes (we live in VA). When we had a nanny, we brought in all her info for the W-2, and he said something about our family being one of a very small handful he's seen who actually paid taxes on their nanny. The guy has a very busy practice and has been at it for 30+ years. I figure that's indicative of something.

Yes

Some Nannies could be receiving welfare, food stamps and/ or SSI and they may not want to lose those benefits.

That is the only reason I can think of to not want to pay income tax.

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).

Anonymous wrote:I always pay taxes. Don't do anything illegal op. Find a candidate with integrity.

THis. Pay on the books and taxes. Our nanny just qualified for a mortgage and I did employer verification etc for her. She wouldn't be able to apply if it wasn't on the books.

I always pay taxes. Don't do anything illegal op. Find a candidate with integrity.

Anonymous wrote:I really wanted to pay on the books. I found candidates willing to be paid on books, but I would say that the "going rate" usually reflects off books so I ended up offering a couple dollars more per hour to our eventual hire. Also keeping in mind that if you are offering regular overtime that's time and a half. (Nanny, who had only been paid off books before seemed surprised at this!). Some nannies also may not be aware of the benefits of being paid on books like eligibility for unemployment compensation, social security credits, etc so it's worth having a conversation about that if they have never been paid on books before.

Thank you, this is one thing I was wondering. My husband seems to think we need to just give in and pay someone cash, but I would much rather keep looking. You make some good points that I will keep in mind.

Thanks, everyone!

Yes - insist on books. Some nannies may then ask for $22/hour or a specific net pay, which you can have the payroll service figure out.

I really wanted to pay on the books. I found candidates willing to be paid on books, but I would say that the "going rate" usually reflects off books so I ended up offering a couple dollars more per hour to our eventual hire. Also keeping in mind that if you are offering regular overtime that's time and a half. (Nanny, who had only been paid off books before seemed surprised at this!). Some nannies also may not be aware of the benefits of being paid on books like eligibility for unemployment compensation, social security credits, etc so it's worth having a conversation about that if they have never been paid on books before.

Not uncommon but would not take the risk or clarify. You need to pay taxes. If your nanny doesn't, it's her risk.

OP you need to set-up payroll and pay all applicable taxes. If your nanny wishes to have her taxes deducted, that's ideal. Otherwise it's the nanny's responsibility to pay what she owes!!! They can do this through quarterly estimated payment or all at once at the end of the year.

Anonymous wrote:Honest people are out there keep interviewing.
That's a good rate.

This. Anyone who asks to be paid off the books is not honest, OP.

Honest people are out there keep interviewing.
That's a good rate.

Since paying off the books is illegal, there will never be an real statistics on how many people do it. I assume, and perhaps wrongly, that most foreign nannies are paid off the books.

I have never had a nanny position that was off the books. Aside from being illegal, it is short-sighted.

I am currently searching for a nanny and have talked to several seemingly great candidates. Then I ask about taxes, and they state that they aren't willing to be paid on the books. Presumably these people are legal to work because one is American and two are married to Americans. I am offering $20 per hour, which seems to be the going rate -- and these are younger, less experienced candidates. Is this unusual, or are most nannies not reporting their income?