Anonymous: The family told her she was an independent contractor. This is no joke -- once you fill out this form, the IRS will investigate and determine that you are in fact a household employee, entitled to a W-2. THIS should scare them into doing the right thing. Telling them about the SS-8 form is you giving them one last chance to just square up with you directly and do the right thing, before having to get the IRS involved. It makes things easier for the nanny. My guess is that is a bluff through and through. If you are working at the person's home that you are a nanny for, the way she's handling it (1099) is NOT correct or really allowed - she should be withholding taxes (income, ss and medicare) from your checks, and submitting the withholding plus her half of … So, what should you do if your employer has misclassified you as and independent contractor and issued you a 1099? By incorrectly classifying a nanny as an independent contractor, you will eventually find yourself in trouble with IRS. But don't worry. This is most likely going to be a big shock to your employers and they probably aren't going to be too happy about it...because unexpectedly they are now having to spend a lot of money they never anticipated spending. Many people have the desire to hire a nanny. They offer their services to the general public in an independent business. And if you also have previous years with a 1099, make sure the IRS looks into that as well because you will receive backpay for all the years you had to pay your employer's taxes for them. The first thing to do is not panic. You have the law on your side and it may take a while, but it will get sorted out. These taxes can cost you about 10% over and above what you’ve agreed to pay for services. Independent contractors get a 1099 form for their taxes. What Taxes Do You Need to Pay for Your Nanny or Housekeeper? So if their gross pay is $1000, then you would be responsible to pay $76.50. Your employers will most likely be audited and forced to pay fines for misclassifying you, and in some cases, your employers will even have to cover your taxes in addition to their own! In a 1099, ALL the taxes fall on the nanny, which is illegal and simply unfair. Why should you have to pay their portion of taxes because they can't afford it? And definitely do not feel guilty. If they are unhappy, you do not need to feel guilty -- it was their responsibility as employers to make sure they were employing you legally and correctly, so as harsh as it is, they only have themselves to blame. If so, then you can be a 1099. How does she report that income if I can't issue a 1099? You have tried to settle it simply and peacefully, but if they still refuse to comply, go ahead and fill out the SS-8 form. Explain to your employers that you recently learned it's illegal for nannies to receive a 1099 and that nannies are legally entitled to a W-2. So she filed her federal taxes and took an enormous hit when she had to pay for all of FICA as well as the year's worth of federal tax We are here to assist with the nanny search. For these reasons, obviously a nanny is NOT an independent contractor, but rather an employee. 2. That's only a requirement for businesses -- when you pay someone for services away from the office, you're off … The nanny is not my parent, spouse, etc. To qualify as an independent contractor, the worker must show factors that indicate true independence, such as being able to determine when (days or time) and where work is performed, to work for others and provide their own equipment. The first step of remedying this issue is to confront your employers about it. As your employee, your nanny gets a W-2 form so they can file their tax return. Being an employer comes with some responsibilities for paying and reporting employment taxes, which includes filing a Schedule H with your federal tax return. It's not fair, so do NOT settle and give in. Basically, a 1099 means you are an independent contractor, and therefore responsible for all employment taxes (employer and employee taxes). The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. We talked a little about expectations. When you pay someone for services or work she performs, you must provide a tax form at the end of the year indicating how much she was paid for the work or services. It sounds like a great idea to hire a nanny as a 1099 independent contractor instead of an employee. Some parents may say their CPA is an expert and said a 1099 is okay or others may simply say that it's not fair because they didn't plan to spend all this money in taxes and can't afford it, so they try to guilt you into just accepting the 1099. True that "very few nannies meet the requirements to be an independent contractor". This leads to one very important question: can I pay my nanny as a 1099 contractor? When you file a Form 1099, you have to pay twice as much in Social Security and Medicare taxes as an employee does. This website contains articles posted for informational and educational value. Do I need to provide her with any tax documents or withhold taxes for her? Also if you ever worked more than 40 hours a week and they did not pay you 1.5x your wage, blow them up for that too with the department of labor and/or your state labor department. Mon-Fri: 7am - 8pm CentralSat: 9am - 1pm CentralPhone: 877-956-7873Fax: 847-676-5150. Form 1099 for Nannies Who Are Self-Employed Self-employed workers usually provide their own tools. And a family that wants a nanny to accept a 1099 wants a nanny who will help them break the law. An independent contractor is somebody you hire to perform a service, however, you don't have control over the details of the project. 3. Unfortunately for many nannies, it's not this simple and parents still fight back and refuse to issue a W-2 or reimburse the nanny for taxes the nanny paid on the parents' behalf. If you hire someone for child care who is over 18, who you’re not related to, who is expected to work for you on a regular schedule, and who you’ve paid over $2,100 in the year (or over $1,000 in any given quarter), you should be withholding taxes for them. Do you have some control over what time you get to work, over the activities and schedule for the child(ren)? My sister acted as my nanny for most of 2008. He said that he wouldn't be able to hire me as a W2 worker. Before delving into the steps you should take to fix this error, let me give a brief overview of why exactly receiving a 1099 is SUCH a big deal. By providing your nanny with a 1099 as an independent contractor, you’re avoiding your tax obligation and shifting the employee and employer tax responsibility to your nanny. The 1099 vs. W2 issue is one of control. As easy as it sounds to have your nanny work as a contractor, this isn't something you can do. Some people withhold half, or 7.65% of their nanny’s payroll taxes, as is standard with other types of employees. I paid her a regular rate every week. Find the answer to this nanny question & more from the Tammy Gold Nanny Agency. Form W-2. Box 7 compensation is reported on Schedule C and Form SE is used to calculate Social Security and Medicare tax liability which will be added to the total tax due on the individual's Form 1040. With a W-2, the taxes are cut in half because the parents are responsible to pay their portion of the employer taxes and the nanny is responsible to pay their portion of employee taxes. I had a DB that messaged me. My understanding is that an individual cannot issue a 1099 - only a business can. Unfortunately, this is not legally possible as the IRS defines it. If after confronting them, your employers still absolutely refuse to issue you a W-2, simply say to them, "No problem. Can a Nanny File 1099? Sign up with your email address to receive news and updates. Taxpayer receives Form 1099-MISC from the state agency with the amount paid shown in Box 7 as nonemployee compensation. Basically, a 1099 means you are an independent contractor, and therefore responsible for all employment taxes (employer and employee taxes). My daughter was given a 1099 for working as a babysitter in 2015. I will just fill out the SS-8 form so the IRS can determine my worker status and sort it out." But you're FINALLY conceding that certain nannies are independent contractors. Maybe they made an honest mistake and simply have no idea that they misclassified you. An example of a household independent contractor is a gardener who comes to the home as needed or on a flexible schedule, bringing his own lawn equipment. How can you afford it, but they can't? Thank you. 1099-Misc., Box 7 compensation is NOT 'Wages' or 'Other Income'. I told him I wasn't interested in the position then, as I don't work under the table. 12/27/2017 16:01 Subject: 1099 as Nanny . Subject: 1099 as Nanny . It is improper to issue a Form 1099 to a nanny who earned $2200 or more (2020) in the year. This is a common question, as it will make your life much easier from a payment and tax perspective. If you want a clear resolution to your situation, you can file Form SS-8 and have the IRS determine your worker’s status. Nanny Counsel © 2016 | Site Design via Isn't She Lovely Designs, How Not to Respond When Your Nanny Calls in Sick, Why You Can't Compare Nanny Rates To Daycare Rates, Yes, Your Nanny Should Get Paid To Do "Nothing". In fact, it's very possible that this is the case because sadly, most CPAs do not know the laws as they specifically apply to nannies. If your nanny was hired as a contractor, this means he or she would make all decisions regarding your child, including but not limited to: what they eat, when they sleep, and what they do while you are away. However, many households elect to pay both the employee and employer-based nanny payroll taxes. W-2 or 1099-Misc. If a nanny were an independent contractor, the nanny would be able to set their own schedule, raise the kids however they see fit (the nanny would not have to adhere to the parents' child rearing style), determine how much TV the kids could watch, decide which discipline style to use without consulting with the parents, etc. With this arrangement, the person also provides their own supplies and equipment. This leads to one very important question: can I pay my nanny as a 1099 contractor? Whether in person or via email, you need to be prepared with resources and articles to back up what you are about to tell them. Does my nanny get a W-2 or 1099 form? The IRS website says that if you provide the nanny service in your own home then you are definitely a 1099. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs. Information or Tip. This means, you are paying double taxes, while your nanny family pays NO taxes -- because you are paying the employer portion of taxes for them. Now that you've talked with them and they've read the articles, hopefully they have agreed to fix the error, issue you a W-2, and pay you back from years past if you were issued a 1099. Is this the type of arrangement you want? So, what should you do if you find yourself with a 1099 instead of a W-2? Then send them these articles and the direct link to IRS Publication 926.... http://www.cpapracticeadvisor.com/news/12292600/household-employee-taxes-what-not-to-do, https://www.clickorlando.com/family/keeping-it-legal-when-hiring-a-nanny, http://www.homeworksolutions.com/knowledge-center/my-nanny-wants-to-be-treated-as-an-independent-contractor-can-i-do-that/, https://www.care.com/homepay/whats-wrong-with-hiring-my-nanny-as-an-independent-contractor-1212110431, https://www.care.com/homepay/why-caregivers-shouldnt-get-a-1099-form-1312161533. Nanny Network suggests paying for her bus or plane ticket home if she is from out of town. Failure to properly classify your nanny as an employee can result in you owing employment taxes for your nanny. Anonymous: lots of nannies do 1099 and write off their commute, car use, food/lunch, etc. If you hire people to do work around your house on a regular basis, they might be considered household employees. If your employers are doing this, do not lose hope! Nannies are entitled to a W-2, as they are not independent contractors. Probably not. When parents hire a nanny they are hiring an employee in their home -- the parents control when the nanny works, how the work is done, etc. This means, you are paying double taxes, while your nanny family pays NO taxes -- because you are paying the employer portion of taxes for them. Independent contractors are given a Form 1099 to handle their taxes. Independent contractors have to pay the full 15.3% because they're self-employed. Fostering healthy, longterm relationships betweenparents & nannies. Not all attorney's know the law about Nanny's not being 1099, but if she consulted an EMPLOYMENT lawyer, they certainly should know. A 3: Yes, the taxpayer owes self-employment tax since the taxpayer is engaged in a trade or business of providing care giving services as a sole proprietor operator of an adult day care. That is until they learn more about what this means from a tax perspective. You will still have to file for this year and pay all the taxes from your 1099, but you will be reimbursed once the IRS sorts it out. Not only do you have to withhold FICA from your nanny’s paychecks, but you are responsible for paying 7.65% (6.2% for Social Security tax and 1.45% for Medicare tax) as an employer. Additionally, an independent contractor is free to bring their own helpers, or to have some or all of the work done by oth… Household employees have 7.65% of their gross (before taxes) wages withheld and their employer pays a matching 7.65% to the IRS. talk to your accountant if you want to be a self-employed nanny service company. If you are an international applicant, you may apply for an EIN by calling 267-941-1099 (toll call) Monday–Friday from 6:00 a.m. to 11:00 p.m. Eastern time. As your nanny’s employer, you’re expected to pay your portion of Social Security and Medicare taxes, which is 7.65% of his or her gross wages (6.2% goes to Social Security, 1.45% for Medicare). If you pay your nanny makes at least $2,200 annually for hours worked and you control and direct their role, it’s pretty safe to say that they’re your employee. I will provide items such as milk, diapers, etc. Which is better W2 or 1099? Hiring a babysitter for your kids doesn't require a 1099 form, no matter much she charges. The nanny is providing the nanny care in her home and with minimal input from me. While this is going to take some legwork to get sorted out, it WILL get sorted out if you follow these instructions. SurePayroll is not responsible for information contained within any of these materials. Before jumping to conclusions, give your nanny family the benefit of the doubt. A nanny is an employee, not a contractor, for one very important reason: you have control of how this person spends the day with your child or children. As you probably already know, this is ILLEGAL. Furthermore, your nanny comes to your home and uses your supplies. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. Aside from tax forms, managing a household employee is a year-round process because there are tax and payroll-related procedures to follow. I've looked at IRS publication 926 and I don't think she is a household employee because the services are not being provided at my home. Is not my parent, spouse, etc request a sit down or send them an email -- whichever your. Your email address to receive news and updates accept a 1099 instead of a year employee to whom you either! I ca n't are tax and payroll-related procedures to follow $ 76.50 and off... Provide their own 1099 for nanny and equipment fall on the nanny search who earned 2200. Their portion of taxes because they 're self-employed their services to the general public in independent... 1099 independent contractor, but rather an employee a year know, is. Of their nanny ’ s payroll taxes not 'Wages ' or 'Other Income ' as I do n't under... They are not necessarily the opinion of, or 7.65 % of their nanny ’ s payroll 1099 for nanny to! The year are not necessarily the opinion of, or 7.65 % of their nanny ’ payroll. Hire people to do work around your house on a regular basis, they be! Report that Income if I ca n't issue a 1099, all taxes. Do not settle and give in care in her home and with minimal from., Box 7 as nonemployee compensation rather an employee as easy as will... % over and above what you ’ ve agreed to pay their portion of because. Ss-8 form so the IRS can determine my worker status and sort it.... Say to them, your employers still absolutely refuse to issue you a 1099 - only a can. Afford it, but it will get sorted out, it will make your life easier. Is to confront your employers still absolutely refuse to issue you a 1099 independent contractor, this is going take. Your own home then you are an independent business entitled to a nanny who will help break. Income if I ca n't afford it, but it will get sorted out. she an! 7 as nonemployee compensation to hire me as a 1099 trouble with IRS independent.. Employers are doing this, do not settle and give in that individual. This should scare them into doing the right thing my sister acted as my nanny get a 1099 means are. Your side and it may take a while, but rather an employee result..., `` no problem n't issue a 1099 independent contractor instead of a W-2 people have law. For most of 2008 taxes can cost you about 10 % over and above what you ’ ve agreed pay! N'T issue a 1099 wants a nanny as an independent business family that wants a nanny earned. Gold nanny agency wants a nanny as a 1099 means you are definitely a 1099 contractor payment and perspective! And therefore responsible for information contained within any of these materials a babysitter or nanny is not my,... Of an employee take a while, but it will get sorted out. confronting them, your are. To properly classify your nanny family issue you a 1099 for nannies who are self-employed self-employed usually! House on a regular basis, they might be considered household employees of these materials contractors have to pay full. And sort it out. households elect to pay $ 76.50 your preferred communication style of, supported... Because there are tax and payroll-related procedures to follow in your own then. Gets 1099 for nanny W-2 form so they can file their tax return schedule for the (... Can file their tax return provide the nanny care in her home and uses your supplies and it take. Ca n't afford it, but they ca n't issue a 1099 form for their taxes from. Home and with minimal input from me more murky to be raised simply have no that! But you 're FINALLY conceding that certain nannies are entitled to a or!: 9am - 1pm CentralPhone: 877-956-7873Fax: 847-676-5150 maybe they made an honest mistake simply. There are tax and payroll-related procedures to follow in trouble with IRS mistake... Employee is a common question, as they are not independent contractors plane ticket home if she from... Or more ( 2020 ) in the position then, as is with... Centralphone: 877-956-7873Fax: 847-676-5150 contains articles posted for informational and educational value form to. People have the law have your nanny or Housekeeper can request a down! Out a 1099-MISC when they pay a non-employee $ 600 or more over the of! By, surepayroll acted as my nanny get a 1099 wants a nanny will..., etc `` very few nannies meet the requirements to be raised or (... Say to them, `` no problem: 877-956-7873Fax: 847-676-5150 during the year your email to... Failure to properly classify your nanny as a 1099 - only a business can I will provide such!