Have a Tax Question? Ask a Tax Expert
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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?
Do you control when/where/how she works?
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.
I'm trying to determine if she's really your employee or if she is an independent contractor
For example, if she picked up your children from school and watched them at her house then she's not your employee
However she sounds like your employee
Unfortunately there's no way around the W-2.
Ok, what other information do you need to determine that? She watched them at our house.
Unfortunately there's no way around the W-2
You will have to file that for her
Ok, how about the timeline then, since W-2s are supposed to be issued by Jan 31?
Well you're just a little late
better late than never
Penalty is like $50, the IRS will bill you for it.
Do we have to tell her to not file her taxes until she receives the W-2 from us?
No big deal
I would advise her not to, or else she is going to have to amend her return
Do you want to pay all of the employment taxes or do you want her to pay 1/2?
We would like to pay only our share.
Okay, then from her next check you would need to start withholding taxes
for social security and medicare
Now, do we also need to get an EIN>?
Yes, you do
you cannot use your social security number for an EIN
Can we get it instantly online?
No, nothing is instant with the IRS
You will need to file an extension for your taxes
and suggest to your nanny that she do the same
How long will it take?
How is an extension filed?
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
You file an extension by filling out this form: http://www.irs.gov/pub/irs-pdf/f4868.pdf
Now, if we let this all go and fine the taxes normally without claiming child-care credit, what are the implications? Just curious!
I meant "file"
You will owe more tax
The IRS is not going to ding you for failing to take a credt
But, starting now you need to handle your nanny's payroll correctly
I would advise filing the w-2 for 2012
I mean, will they come after us for not paying FICA tax, and for not providing her W-2?
Well, theoretically if she's not provided a W-2 she should be filling out a schedule C
Well, for sure, we'll fix it for 2013.
and paying self employment taxes
so she would be paying all of the FICA taxes
BUT!!! Since it is a tax you are supposed to pay you can get in trouble for not paying your nanny tax
Ok, if we do get in trouble, how much trouble is that, a fine? How much?
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
Well, in extreme cases criminal charges can be filed.
Former NYC Police Commissioner Bernard Kerik was jailed for nanny tax fraud
Ok, I guess we'll file an extension, and do it the right way.
That's always the best way to go about it...and then start withholding from her check
Ok, thanks very much for your help.
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Thank you for your positive rating...please come back and see me if you need assistance filling out your W-2 for your nanny.
I hope you don't mind answering a few minor related questions.
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?