We’ve recently been informed by our household tax specialists, Breedlove & Associates, that an existing tax law is now getting a lot more attention given our current economy and the increase in unemployment claims. If you are a nanny who does any on-call and/or temporary nanny work, you need to be aware of this law and the new attention it’s getting. If a family pays more than $1,000 per quarter in combined wages to all temporary household employees, they are obligated to contribute to the state and federal unemployment insurance funds. If a family choses to adhere to this law, it will flag each household employee to the IRS. While there is no tax-withholding obligation on the front end for the nanny, the IRS could use this information to check to see if these wages are being claimed on the nanny’s tax return. Therefore, it is always a good idea to track all your income throughout the year, even if it’s just temporary work.
For more information, feel free to contact Breedlove & Associates. They are willing to explain this law further and answer any questions you might have.