Household employees are paid under the table a lot, but the penalties that can come from this could be substantial. The IRS is cracking down in this area and people that have been paying their household employees under the table could face years of owed back taxes plus penalties and interest. Household employees could be your nanny, a gardener, maids, and many others. If you do not control how they do their work, such as with a hired cleaning company, you would not classify them as a household employee. With the 2014 tax season upon us, one should remember to comply with the IRS concerning household employees.
See Belfint Lyons & Shuman, CPA’s, “The Nanny Tax,” JD Supra Business (Jan. 22, 2015).
Posted by Aryane Garansi, Associate Editor, Wealth Strategies Journal