Our Experience: It’s been our experience and the experience of our clients that if the person who you are considering hiring will not agree to pay / withhold taxes they are not the person that you should hire.  We believe that if an employee knowingly circumvent required tax payments this is an indication of the person moral compass.  It should also be an indication that you don't want this person in your household.  Consider the responsibilities and information that the person will become knowledgeable about working in your house.  We also firmly believe that know one should pay one penny more in taxes than legally necessary and that is what we are here to help with.

Points to consider for your household employee: The benefits of complying with all the requirements of household employee are numerous, and we believe that your household employees really can’t afford not to. Once the benefits are identified they will agree that the benefits far outweigh the cost of a slightly smaller paycheck.    Below are a few points to provide to your nanny or household employee if they question the need to withhold taxes and report wages.  Employment History Employment history is critical for many aspect of daily life. If your employment is not documented, it is as if you do not work. If you want a car loan, a mortgage, a student loan, a credit card application, a health insurance application, an auto insurance application, future job applications, and the list goes on, employment history is necessary.

Unemployment Insurance When paid legally, you are entitled to receive approximately 50% of your salary for up to six months if you lose your job due to no fault of your own. This benefit is free to you, as your employer pays the cost of the program. Social Security/Medicare Benefits For many, taking advantage of these benefits is years away, but consider these tax withholdings as a good investment.  The amount of money that you will be able to receive for your retirement will be ten’s of thousand more then contributed.

Disability Benefits Many states, employees pay State Disability Insurance as a part of the taxes withheld. If you must take time away from work due to non-occupational illness or maternity leave, you are entitled to benefits while you are away from work. Earned Income Credit Employees may be able to receive the Earned Income Credit (EIC), which can eliminate some or even all federal taxes they owe. The EIC is available to employees who have at least one qualifying child and expect to earn less than $33,030 (in 2005).   Example.  Your nanny earns $1,200/month and has two (qualifying) children.  The amount withheld from her pay would be ~$1,102 in FICA and $275 in federal income taxes during the year.  However, she is entitled to an EIC of about $3,800, which offsets all of her taxes and provides her with over $2,400 extra (note this is paid by the federal government not you)! In other words, she will take home over $2,400 more than if she had been paid cash illegally.  We can assist in reviewing From W-5 for you to determining if your employee might qualify.

HouseHoldPayDay.Com...Household Employers Tax & Payroll Solution

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