You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done. If the worker is your employee, it does not matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.
To learn more about the infamous Nanny Tax, be sure to check out the Household Employer's Tax Guide, Publication 926. This guide takes you through all the information you need about nanny taxes. It's well organized and includes helpful tips, explanations, and a Household Employer's Checklist
I received a link from Sandra McAubre at hireananny.com and thought it would be an interesting to share. The article is called “Why Paying Your Nanny Through Your Business Books is Illegal". I love how the article talks about how deducting nanny expenses as a business tax deduction is illegal. We all know that IRS audits can lead to penalties, back taxes, divorce (hopefully you didn't marry for money) and alot of headaches. Divorce is a joke but audits still suck. Therefore, don't think you are smarter than the IRS and try to do it.
Here is the link from the Goodfellas at hirenanny.com:
Thank you Sandra!!!