Heather Nauert’s withdrawal from consideration as UN Ambassador is an important lesson for families
On Feb. 16, Heather Nauert, a potential nominee for U.S. Ambassador to the United Nations, took herself out of consideration for the esteemed position. The reason? According to the Washington Post, CNN and Bloomberg, a background check revealed that the Nauert’s nanny of 10 years was not only ineligible to work in the U.S., but Nauert had failed to pay household employment taxes on her nanny’s wages for a period of time.
“When a family hires a nanny, they are required by law to verify their work eligibility using Form I-9 before the nanny’s first day of work,” says Tom Breedlove, Sr. Director of Care.com HomePay. “The family can pay the nanny in cash, but it makes it tougher to create a paper trail proving that taxes were accounted for versus using a personal check or electronic payment option.”
Nauert is not alone in running into tax issues with household employees. Former Labor Secretary nominee, Andrew Puzder, admitted to hiring undocumented workers and failing to pay household employment taxes less than two years ago. Around the same time, current Acting White House Chief of Staff, Mick Mulvaney, admitted to not paying household employment taxes from 2000-2004 during the lead-up to his eventual confirmation as White House budget director.
Indeed, the IRS outlines a set of federal procedures and rules for families hiring household employees in Publication 926. Briefly, if a household employee, such as a nanny, earns $2,100 or more in a calendar year, the family is required to withhold taxes from those earnings and pay taxes throughout the year. There may also be additional tax and labor laws required by the state that are not found in Publication 926. You can visit Care.com HomePay to see the requirements in your state.
While you may not be running for a high-profile job like Nauert was, it’s still important to follow IRS laws. It’s easy for an average family to be caught for not paying taxes when a former nanny does something as simple as file for unemployment benefits after they’re let go. With no record of tax payments, the state and the IRS would quickly discover a family had been paying their nanny under the table.
The rules for hiring a nanny are not much different than the payroll and tax laws required of any other business in the U.S. Sure, the employment situation can feel different to a family hiring a nanny because the home is not viewed in the same way as a typical workplace. However, the IRS does not make this distinction so it’s important for families to understand what their responsibilities are so they don’t end up in a situation where there are financial or professional consequences.
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