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What may happen if I do not pay the nanny taxes?

Failure to report wages paid to a domestic service worker – including a nanny, senior caregiver, housekeeper and more – compromises the validity of your personal income tax return. These taxes are included on your personal federal income tax return, and you sign/submit this tax return under penalties of perjury. If you do not pay the nanny taxes, you commit tax fraud. If caught in an audit, this can be a felony offense.

Additionally, there is no statue of limitations on the failure to report and remit federal payroll taxes. You are most likely to be “caught” when a former household employee files for unemployment or social security benefits. A nanny or senior caregiver is typically only employed for a finite time, and when the job ends they are entitled to unemployment insurance benefits to tide them over as they search for a new job. Employers are generally required to pay back taxes, penalties and interest charges, and usually professional fees for an accountant and/or attorney. HomeWork Solutions can assist employers becoming current with back tax obligations.

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