A nanny is not always a luxury but a neccesity if the profession you work in does not allow you to be able to pick your child up from daycare by 5:00pm (after dropping them off at 8:00 am) Even after school programs end at 5:00pm. Also, I believe when you have employees in a small buisness everything you pay them and all the taxes you pay as part of their employment are deductible from the buisness income, however a nanny's salary was only deductible up to $2,600, less than 2 months salary I paid her at the time. It took 1/3 of my take-home pay as primary breadwinner, equal to my mortgage, to pay for the "luxury" of having a nanny. I wished I could have paid more,all the taxex and health insurance because she was worth it. It isn't whining when all those taxes and the complicated paperwork would push you over the edge making it impossible to do the right thing. By the way, our lifestytle never afforded luxury vacations and coffee drinks.
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The Nanny Tax Nightmare
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As it turned out, we ended up mutually parting ways before she'd been with us a year. She wanted a raise. And after paying FICA, we simply couldn't pay her more. Meanwhile, we were competing against families who can pay more because they pay in cash. Even if you can afford to match the competition and still pay the nanny tax, the paperwork alone might be enough to send you over the brink. One friend tried to calculate her nanny taxes herself. She got it wrong and was fined. And she is doctor who understands statistics. "Trying to pay this on our own created so much stress," she said. "It seemed ridiculous that it should be that difficult." She ended up forking over $500 a year to have a payroll company handle it.
You can't even trust your accountant to get it right. After we got inaccurate advice from our tax-prep firm we too tackled the tax ourselves. I applied for a federal and a Minnesota tax ID number, printed out weekly payroll receipts and calculated the Social Security and Medicare taxes to withhold. I stayed up past midnight trying to fill out a quarterly wage detail on the Minnesota State Unemployment Web site before the deadline passed and we were fined … again.
I'm not suggesting that we eliminate this requirement, but we should not have a system where anyone who's ever hired a summer babysitter and not paid the tax is made unfit for public office. Parents owe payroll taxes if they paid a nanny more than $1,600 in 2008. Let's raise that threshold. And simplify the paperwork. In the meantime, here's my advice: If you aspire to public office, hire a company to handle your nanny tax. Or, enroll your child in the nearest child-care center. It's cheaper, you won't have to bother about taxes. And, you'll meet more of your constituency.
Maja Beckstrom Lives In St. Paul, Minn., Where She Writes About Family And Parenting For The St. Paul Pioneer Press. She Originally Blogged About The Nanny Tax For The Newspaper's Parenting Web Site, Minnmoms.Com. She Plans To Devote This Weekend To Figuring Out Her Former Nanny's W-2 Form.
© 2009
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