So, with tax season upon us, I am gathering our stuff to do our taxes. We had an awesome summer nanny who took on a group of school-aged kids and had a blast. So far, she has mentioned nothing of reporting the income on her taxes, so that the parents can deduct it for childcare. Now, if this was just a highschool kid, only watching our kids occasionally, I wouldn't think of it. But this is basically her summer employment (with 5-6 kids, added up, is decent money). When I babysat an infant, I didn't hesitate to report the income, and the parents got their deduction.
Anyway, I don't want to come off the wrong way to her (I guess that's silly since it's basically the law to report it). But how do I approach her about it? Yes, we will be using her again this coming summer. In fact, now she has another woman to help so she can watch more kids.
Yikes, this is something you really need to ask first...before any transactions happen. I would just ask her. Tell her you're doing taxes, and you need to claim that money...and she needs to, as well. She probably always gets paid in cash and really never thought about it.
ROFL....so glad to see the accountants here.
We actually just talked to our accountant, and none of these answers are correct. I highly recommend you talk to an accountant. Her reporting income has nothing to do with your deduction. Moreover the use of the term "nanny" is troubling.
According to the IRS, whether YOU pay her income taxes (withholdings) or she does depends upon whether she is an employee or an independent contractor. Employee - you pay. Contractor - their responsibility.
There are no clear definitions as each situation is different. But some broad guidelines
- works full time - employee
- works in your home - employee
- receives all or majority of her income from one source, you - employee
- babysitting - contractor
(you can also google contractor versus employee for more info)
So I see "nanny", but I think you mean your summer child care provider. If the provider was working for several families (much like a daycare), then that seems to lean towards contractor (which is not a nanny).
Again, I am not offering legal, accounting or tax advice. I highly recommend that you call up a qualified professional and seek their advice.
I have never had a problem asking, because I think if you nanny, it should go without saying that the parents will want the tax deduction. And, when you are self-employed like nannies are, you HAVE to report the income. I just called and asked, "what's your social security number so I can report what I paid you on my taxes?" I've never had any problems getting them to give me the info.
Technically it is YOUR responsibility as the parent to ask any provider for this information, so a summer care giver should be no different. Here is a blog post from Tom Copeland, who is considered THE authority on home childcare situations such as this (he has helped changed many tax laws for provider benefit, etc).
http://www.tomcopelandblog.com/2011/01/the-truth-about-en...
Just tell her you need the info to claim it on your taxes, etc. If she doesn't plan to, then that is HER issue and she is putting herself at risk for audit and tax fraud. If she will not offer the info to you, then do as your tax adviser advises which likely will be to put together your own records (cancelled checks, etc) showing the sum of payments and the times frames.
Best of luck.
This is something that should have been discussed prior to hiring her, and you'll need invoices for her services. I have never reported summer childcare because all of mine have been college students or teachers who clearly had no intention of reporting their earnings. If your childcare expenses for the rest of the year were more than $6K (the most you can deduct) then if I were you, I would let this go. Otherwise, you can certainly ask her for her tax ID for reporting purposes, but don't be surprised if that results is a REALLY awkward conversation at which point you'll have to decide whether or not reporting this expense is worth possibly losing a good childcare situation for next summer.
Yep. Just ask her for the information you need. Or, you can say, "I'm working on our taxes and want to make sure we both have the same number. I have $X as the amount. Do you have something different?"
I've had to do this with my tutoring business (back before I realized I had a business and needed to keep excellent records). I would call/email the parents and we would compare notes. Such a hassle.
If she meant to not report her income, then she should have said so from the beginning so it was something you could consider when hiring her. In the future, I would make a form for babysitters/nannies and have them fill in the amount at the end of employment with whatever information you would need. In MN, we needed the social security number of our babysitter if she didn't have FED ID number.
Good luck!
Doesn't hurt to ask for her social security number so you can report it. Beyond that there is nothing you can do.
Well you can turn her in for tax evasion but that seems rather petty for a deduction that may yield you only a couple hundred in actual cash and lose a good sitter.
If she has several kids and works in her home, she isn't a nanny. Just ask her for her social security # and address and report it. But if she was staying with you, then you were to deduct the taxes and send them in.
Hi, Mom:
Give her the statement of her earnings and send a copy to the IRS.
Let them handle it if she doesn't.
Thanks for being honest.
Good luck.
D.
Just ask her for it. Tell her that you need it for tax purposes. If she does not give it then you report all the info you do have for her.
I have always worked these details out in the begining, however since you want to use her agian, and this seems to be an issue, you should bring it up ASAP! Have you talked ot any of the other mom's?
I would call her and ask for her information for your tax purpuses. It is not your responsibility to make sure she has filed on the income or not. It is income, she should understand she has to file it.
If she refuses to give you information then you can just add it to any other child care expenses and be done with it. They worse that can happen is they ask to see some receipts. If you paid her with a check that should suffice. Her SS # might even be on the back of the checks too.
You should always have this discussion before hiring a nanny. But something to think about in addition to needing the money claimed. Is this something that you can actually claim? The tax laws say you can claim "X" on your taxes. So anything you claim over "X" is not really going to make a difference. Not sure if that made any sense at all lol. But my boss gave me a tax thing to take when I get my taxes done. He said here I am claiming that I paid you $5000 that is all that I am allowed to claim so thats all I am making you claim. He paid me probably double that easily but said why should I pay taxes on it when they don't let him get a tax break for it.
I never understand why this is not discussed PRIOR to employing a sitter.
If you were paying her *top dollar* like any other local provider then getting her SSN shouldn't be a problem. HOWEVER if she was inexpensive compared to other providers then be prepared for her to say she wasn't planning on filing the income and you should let it go.
