An increasing number of families are contacting NannyChex wishing to pay their nanny “on the books,” but getting resistance from their nanny. The objection from nannies and other household employees is understandable: no one likes paying taxes.
Of course, the consequences for not properly documenting an employee and reporting their wages/paying taxes falls almost entirely on the employer so employers are wise to stay firm in paying their nanny legally. While nannies may take home less due to having taxes withheld, there are many benefits to nannies who are paid “on the books.” Below are just a few examples:
-Nannies will pay Social Security and Medicare taxes and get credit for their earnings history. These contributions strengthen this safety net for employees in their retirement years.
-Nannies will have an employment/payroll history which will be useful should they want to take out a loan, rent an apartment, buy a car or house, or make other similar large financial transactions. The employment history may also help build a credit history for the employee.
-Nannies will receive the same benefits and protections that other professionals receive. This includes being eligible for unemployment benefits when employment ends and possibly having workers’ compensation and disability insurance coverage should they be injured on the job (these insurance benefits vary by state and employment situation).
If a nanny who was paid under the table attempted to file for unemployment or make an insurance claim after a work-related injury, they, and their employer, would endure a lengthy process where the employment history would be audited and scrutinized which would not only delay/complicate the nanny’s claim, but would likely leading to back taxes being owed by both the employer and employee, and potential legal claims as well.
-Nannies will not need to agonize over how to handle their income when filing their personal tax return and will receive a W-2.
For more information about the benefits of paying a household employee on the books, for both employers and employees, please call NannyChex today at 877-626-6924 for a free consultation!