If you pay someone to come to your house and take care of your children, you may wonder if you need to pay the “nanny tax.”
Many household workers expect to be paid in cash, either because they are unbanked or don’t want to have taxes withheld. Who will know if you avoid all that paperwork and bother, electing instead to just pay cash and forget it?
Unfortunately, it is possible to be found out if you don’t pay taxes on wages paid to household employees. Your employee could get hurt on the job or file for unemployment benefits, for example, at which time it becomes obvious they aren’t covered.