President Donald Trump’s cabinet pick for White House budget director owed more that $15,000 in state and federal unemployment taxes after hiring a babysitter for his triplets from 2000 to 2004.
Representative Mick Mulvaney admitted to failing to pay what is known as a “Nanny Tax” in a questionnaire that was reviewed by the Senate Budget Committee before his confirmation hearing — which is scheduled to take place on Tuesday, Jan. 24, according to the New York Times.
“I have come to learn during the confirmation review process that I failed to pay F.I.C.A. and federal and state unemployment taxes on a household employee for the years 2000-2004,” the South Carolina conservative wrote in the questionnaire.
Mulvaney has since paid the federal back taxes and is awaiting a bill from his state government, the Times reported.
Believe it or not, but Mulvaney is not the only government official to fail to pay such their “nanny taxes.” And, in most cases, such an oversight has been enough to derail political advancement — though it’s not clear if that will happen to Mulvaney.
Mulvaney Isn’t Alone
Here are a few other politicians who failed to pay their “nanny taxes” — and ultimately paid the price for it with their careers:
- Zoe Baird was forced to withdraw her nomination for US Attorney General under Bill Clinton’s administration she and her husband hired a nanny and a part-time driver and failed to pay related taxes.
- Bernard Kerik, a former New York Police Commissioner was sentenced to four years in federal prison after failing to pay his nanny tax and facing other charges.
- Stephen Breyer was passed up for a possible seat on the US Supreme Court for failing to pay a nanny tax for a woman who worked in his home for 13 years. The seat that might have been his eventually went to Ruth Bader Ginsberg.
Not a Politician? You Still Need to Pay Nanny Tax — It’s the Law
So, what about regular people who aren’t in the public eye?
“The law is still the law. You still need to pay the tax,” says Tom Breedlove, director of Care.com HomePay. “And the sooner, the better.”
According to Breedlove, it’s true that the possibility of being carted off to prison like Kerik — or hitting a major roadblock in your career like many others — is slim. That’s because the government understands that it’s possible that many people don’t even realize they should have been paying employee taxes on part-time babysitters — or even on full-time nannies.
“There are some families that could legitimately just not even know,” Breedlove says. “It’s a case-by-case basis on what the state or the IRS may elect to do.”
In some cases, he added, the I.R.S. could simply calculate the back taxes you own plus interest, and then send you a bill. That being said, federal law states that the punishment for not paying your nanny taxes could be as severe as a $25,000 fine on top of your tax bill and up to a year in jail.
Here’s What You Need to Do About Your Nanny Taxes
While you have the option to file the appropriate paperwork on your own, the process can get difficult. So, Breedlove suggests that families who are trying to get their tax problems resolved use a service like HomePay or tax professionals to help you get through this.
It’s worth noting that the I.R.S. is far more likely to be lenient with those who try to fix the problem before they’re caught. That could happen in routine audits, or when a nanny attempts to file for unemployment after a relationship sours, or when kids grow up and the nanny is no longer needed.
