For years I told people if Zoe Baird had come to White House Nannies, she would have been Attorney General. I wasn’t kidding. Clearly we would have steered her away from undocumented workers and we would have advised her to pay her nanny taxes. I was pretty annoyed she did it her way. Now we hear her name (along with other illuminati like Caroline Kennedy) being invoked again as vetting season is upon us in the new administration. How many people have been disqualified for office because they failed to withhold taxes for their household employees? Apparently, there are a lot of disappointed office seekers out there according to the Washington Post article.
Not to be snarky, but I have to ask: You really didn’t know you have to withhold taxes from your nanny or housekeeper? You are smart and educated and want to be a Supreme Court Justice. No, your nanny can never be considered an independent contractor. The other concept that seems to elude people is overtime. It’s the law and you don’t get to pick an arbitrary number to pay. Here’s an example of creativity that we’ve seen in a contract: We pay $20 an hour and will pay $25 for any hours worked over 50. While at least the concept of overtime was addressed, it was not computed as required. Time and one half for any hours worked over 40 hours in a seven day period. Period. No variations on a theme.
The idea that you have track money you pay for occasional babysitting is also often-and somewhat understandably- ignored or forgotten. If you pay any childcare provider over $2,000 in a calendar year, employment taxes need to be paid. That means if you went out 25 Saturday nights and have paid your regular babysitter $80 each time, you’ll need to pay taxes. If your babysitter or nanny decides she needs a W2 and you don’t give her one, she may contact the IRS and then you will have penalties to pay in addition to the taxes.
Here’s a final thought. If you need security clearance for your next job and you haven’t paid taxes on your household employees, you could be in serious trouble. So not worth the risk. Especially in this city where aspirations for higher office are the norm.