Yes, Certain Professions Have More Nanny Tax Risk
Stephanie Breedlove is the founder of Breedlove and head vice president of Care.com HomePay and I can tell you -- I have never met a more engaging tax professional! And while all nanny employers should pay taxes, she explains why some careers are more at risk if they try to pay under the table.
At a recent gathering, I got to talking with a nice young couple who just moved into the neighborhood. They had a lot of questions about our school district, but admitted their kids were still in the "nanny years."
"Oh, yes. The nanny years." I said knowingly.
They may have noticed that I’m a few years older (wink, wink), but they politely asked, "Do you have a nanny too?"
"I did for many years. Now we run a nanny tax firm. We started it 20 years ago when our boys were in diapers."
Longer pause. I could see the wheels turning in her head.
So I changed the topic to them and their kids. Found out she’s a lawyer. He’s a corporate accountant. Kids are 4 and 2. Loved the neighborhood so far.
But then she interrupted the small talk. "As an attorney and a CPA, what happens if we get caught not paying nanny taxes?"
I swallowed my drink – hard. And smiled. Wow. I like a lady who can cut to the chase.
I explained what we’ve seen happen hundreds of times – fines and headaches from the IRS and state tax agencies on top of back taxes and interest charges. Getting caught is expensive. Perhaps the scariest part for them, though, was the potential for a felony tax evasion charge that could cause them to lose their professional licenses – and jeopardize their earning potential.
Yes, we hear about political figures getting lampooned in the national media. But there are other careers that require a professional license or demand a high level of integrity (media figures, accountants, attorneys, financial planners, wealth managers and medical professionals, to name a few – see the rest of the list) >>
To ease their concern, I ended on a high note. "The good news is it doesn’t cost much to eliminate that risk. There are tax breaks when you pay your nanny on the books and they’ll offset most – maybe all – of your employer tax costs."
"Interesting" they said together. I could see the wheels turning again.
That couple has now become a client.
Some funny things can happen at dinner parties. But I’m always proud to take stress off people’s plates.
Stephanie and her team are here to help with any of your nanny tax questions as well. They can be reached at 888-273-3356.