How to get legal re nanny
Hello BPN. I hired someone last summer to watch my kids and the arrangement lasted longer than I thought it would. I didn't give much thought in the beginning to all the legal stuff like taking out taxes. Now that January is approaching I realize I need to either go back and pay taxes or at least move forward legally. I just don't know how to get started. Should I use an accountant? A payroll service? Any recommendations? TYIA!
Dec 4, 2024
Parent Replies
It is illegal to hand them a 1099. Many tax consultants will tell you it's a gray area, but it is illegal.
If you pay your nanny more than $2700 a year you have to supply them with a W-2.
This should've been done during the hiring process.
There are many payroll companies that do all the bookwork for you when you sign up.
In the past, the IRS did not particularly care as long as they were getting their taxes, but now they are going after families and nannies.
Everything has a paper trail, even if it's cash because the IRS can go into your bank account and go back farther than seven years.
At this point if you haven't deducted the taxes of the past paychecks, you might have to pay this yourself.
You need to have a discussion with your nanny also and make her aware of how you're filing the taxes and that she is receiving a W-2. Again at this point, I believe the financial part should fall on you because you did not do the process during payroll.
I was in a similar situation a couple of years ago. I asked my accountant to find that she and most other accountants do not like to manage household payroll except for filing the Schedule H form. She referred me to Savvy Nanny Payroll Services, which I believe is based in Berkeley though it is all online. It worked just fine. It takes a little bit to get set up, but the payroll and tax payments went really smoothly. Here is the link: https://savvynannypayrollservices.com/ Best of luck.
We are very happy with : https://www.poppinspayroll.com
I think they will help you figure things out retroactively if needed.
I was in a similar situation in 2020 and found Home Pay to my great relief. They handled all the required state and federal forms and back-tax calculations to get us compliant with having an ongoing caretaker. Once that was taken care of, they handled payroll. It was super easy and efficient and not that pricey from what I can recall. I recall there was a local service that was not as comprehensive in its offerings that was cheaper and popular among BPN'ers, but I appreciated HomePay's depth of expertise, and their fast response times [side note: I got a live person when I needed one, who knew all about my account, even if it wasn't the same person!]. This was especially helpful in our 'clean up' situation, in the event that we needed more tax advice and support. Fortunately we did not--but we kept the payroll service because it was so easy to work with. Highly recommend! myhomepay.com