As a parent and a nanny, I insist on paying taxes, even when my employer asks to pay me "under the table". I appreciate everything that taxes do for my family and me. There are many things that I could not afford to pay for without government taxation.

I think that some nannies believe that there are few if any risks to them. Some on this board have got as far as advocating that if something goes south that they could always report an employer who did this for them out of revenge. The reality is that the risks are higher to the nanny. While an employer would owe the back taxes on SSN/Med, chances are that this really isn't a huge financial hit to them. They may be annoyed and mad but it isn't making a difference in their ability to pay their bills. Nannies on the other hand may not a good savings account to deal with back taxes.

I understand why its tempting for nannies to want to be paid under the table but its a really bad idea.

NP here, but just with a warning not to mess around with back taxes. I owed some a few years back after a mixup after my divorce. After just 2 years late, The interest and penalties were 2/3 of the total bill.

Many nannies don't owe any back taxes. The employer's are responsible for all the payroll taxes they didn't collect so the nanny is left with income tax. If she is unemployed any chunk of the year, she probably doesn't have enough income to owe any, or much. I agree that it is better to be on payroll, just pointing out that the risks to the nanny are less than most families realize.

I disagree that there are not risks to the nanny. A single nanny with a large gap in her employment may not owe back taxes but unless she is making around minimum wage or working less than 40 hours with a low salary she most likely owes something in federal and state income tax. If she is married and filing jointly so her husband can report the deduction but not reporting her income she could end up owing more than employer does for SSN/Med. If she is not reporting her income so that she can qualify for state or federal assistance programs then this is fraud.

Anonymous wrote:

Anonymous wrote:The people who say a nanny can't collect unemployment if paid under the table are woefully uninformed. I was paid under the table and win an unemployment claim. The employers have to pay back taxes.

You would have had to pay back taxes as well unless your employers had to pay your share of taxes and penalties. Nannies can submit unemployment claims even if they are paid in cash, but back taxes will have to be paid and penalties usually incur.

It's so much easier to be put on payroll. The benefits far outweigh the drawbacks. The legal aspect goes without saying.

Many nannies don't owe any back taxes. The employer's are responsible for all the payroll taxes they didn't collect so the nanny is left with income tax. If she is unemployed any chunk of the year, she probably doesn't have enough income to owe any, or much. I agree that it is better to be on payroll, just pointing out that the risks to the nanny are less than most families realize.