From AccountingWEB, Guy Maddalone offers seven recommendations for engaging with a nanny, the first of which is classifying the nanny properly as an employee or independent contractor. Guy writes:
1. Use the “Employee” Classification
The IRS has consistently ruled that a household worker is an employee and not an independent contractor. It’s really quite simple. The family provides instructions, sets the worker’s schedule and provides the tools and equipment to do the job. If there is any doubt, the family can file Form SS-8 with the IRS for a determination of the worker’s status.
Misclassifying a household employee as an independent contractor is considered felony tax evasion. Domestic workers should receive a W-2 at the end of the year, not a 1099.
Read the full story at 7 Steps to Help Clients Follow Nanny Tax Laws | AccountingWEB