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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13582
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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We paid our nanny about $6000 in 2012. She gave us receipts

Resolved Question:

We paid our nanny about $6000 in 2012. She gave us receipts and we used them to get reimbursement from dependent-care FSA. What I have learned just now (April 8, 2013) is that we are supposed to provide her W-2 and pay FICA tax on it. But are we not too late for giving someone a W-2? What should be our plan of action now. I don't mind paying FICA tax but is there a way to avoid giving her a W-2? What would be a quick way to resolve this just at my end without bothering the nanny?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Hello, and thanks for using JustAnswer.com

MyVirtualCPA :

Let me ask more about your nanny. Does she work solely for you, or does she work for other families as well? Where does she watch the children?

MyVirtualCPA :

Do you control when/where/how she works?

Customer:

She watched the children at our house. I do not know what she does when she is not working for us. We provide guidelines on what to feed the babies, some basis do's and don'ts but generally we don't really control everything she does.

MyVirtualCPA :

I'm trying to determine if she's really your employee or if she is an independent contractor

MyVirtualCPA :

For example, if she picked up your children from school and watched them at her house then she's not your employee

MyVirtualCPA :

However she sounds like your employee

MyVirtualCPA :

Unfortunately there's no way around the W-2.

Customer:

Ok, what other information do you need to determine that? She watched them at our house.

MyVirtualCPA :

Unfortunately there's no way around the W-2

MyVirtualCPA :

You will have to file that for her

Customer:

Ok, how about the timeline then, since W-2s are supposed to be issued by Jan 31?

MyVirtualCPA :

Well you're just a little late

MyVirtualCPA :

better late than never

MyVirtualCPA :

Penalty is like $50, the IRS will bill you for it.

Customer:

Do we have to tell her to not file her taxes until she receives the W-2 from us?

MyVirtualCPA :

No big deal

MyVirtualCPA :

I would advise her not to, or else she is going to have to amend her return

MyVirtualCPA :

Do you want to pay all of the employment taxes or do you want her to pay 1/2?

Customer:

We would like to pay only our share.

MyVirtualCPA :

Okay, then from her next check you would need to start withholding taxes

MyVirtualCPA :

for social security and medicare

Customer:

Now, do we also need to get an EIN>?

MyVirtualCPA :

Yes, you do

MyVirtualCPA :

you cannot use your social security number for an EIN

Customer:

Can we get it instantly online?

MyVirtualCPA :

No, nothing is instant with the IRS

MyVirtualCPA :

You will need to file an extension for your taxes

MyVirtualCPA :

and suggest to your nanny that she do the same

Customer:

How long will it take?

Customer:

Oh, ok

Customer:

How is an extension filed?

MyVirtualCPA :

The EIN can be obtained online, it may be instantly now... wow...here's the link: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-%28EIN%29-Online

MyVirtualCPA :

You file an extension by filling out this form: http://www.irs.gov/pub/irs-pdf/f4868.pdf

Customer:

Now, if we let this all go and fine the taxes normally without claiming child-care credit, what are the implications? Just curious!

Customer:

I meant "file"

MyVirtualCPA :

You will owe more tax

MyVirtualCPA :

The IRS is not going to ding you for failing to take a credt

MyVirtualCPA :

credit

MyVirtualCPA :

But, starting now you need to handle your nanny's payroll correctly

MyVirtualCPA :

I would advise filing the w-2 for 2012

Customer:

I mean, will they come after us for not paying FICA tax, and for not providing her W-2?

MyVirtualCPA :

Well, theoretically if she's not provided a W-2 she should be filling out a schedule C

Customer:

Well, for sure, we'll fix it for 2013.

MyVirtualCPA :

and paying self employment taxes

MyVirtualCPA :

so she would be paying all of the FICA taxes

MyVirtualCPA :

BUT!!! Since it is a tax you are supposed to pay you can get in trouble for not paying your nanny tax

Customer:

Ok, if we do get in trouble, how much trouble is that, a fine? How much?

MyVirtualCPA :

Since you know about this now, and if you don't fix it you could subject yourself to criminal or civil penalties. Don't freak out, you're not going to jail - but I have to tell you of the worst case scenario consequences

MyVirtualCPA :

Well, in extreme cases criminal charges can be filed.

Customer:

Hmm, ok

MyVirtualCPA :

Former NYC Police Commissioner Bernard Kerik was jailed for nanny tax fraud

Customer:

Ok, I guess we'll file an extension, and do it the right way.

MyVirtualCPA :

That's always the best way to go about it...and then start withholding from her check

Customer:

Ok, thanks very much for your help.

MyVirtualCPA :

You're welcome

MyVirtualCPA :

please take a moment to rate my response "excellent" so that I may receive credit for assisting you today with this matter

MyVirtualCPA :

Thank you for your positive rating...please come back and see me if you need assistance filling out your W-2 for your nanny.


 

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13582
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and other Tax Specialists are ready to help you
Customer: replied 1 year ago.

I hope you don't mind answering a few minor related questions.

Customer: replied 1 year ago.

 

 

I'm creating W-2 for nanny.

Do I need state ID in W-2 for Ohio? How do I get it?

 

I did not withhold any taxes. Is that a problem?

 

I plan to pay my portion of taxes on Sch-H. Is it ok to leave the tax withheld columns blank?

 

Do I need to send W-2 copy to state (Ohio)?

 

Do I need to do anything else besides give W-2 to nanny, send it to SSA with W-3, and pay my portion of FICA tax on Sch-H?

 

What do I need to do on state form?

Expert:  Megan C replied 1 year ago.
I'm not certain if you would need a separate state ID for the state of OH.

Not withholding taxes is not a problem, but you will need to pay the entire amount that is due - not just your portion. You could get reimbursement from your nanny but the tax will need to be paid.

Yes, the state would need to get a copy of your W-2 as well.

You will also need to fill out schedule H. Other than that you got the basic idea - W-2 to nanny, send it to SSA with W-3 and pay your portion on Schedule H.

I'm not certain what you would need to do for OH - I can only speak to the federal income tax treatment.

Hope you have a great night! Thanks
Expert:  Megan C replied 1 year ago.
Thank you for the positive rating. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question, and it will be routed directly to me. Thank you again for using JustAnswer. For the quickest service, please post a new question.

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