Here at Trusting Connections Nanny Agency, we strive to be nanny advocators and industry educators. If you are a nanny, babysitter, maid, house manager, or a family assistant, you are entitled to all the basic benefits an employee should get. Learn what you should be receiving with this informative video below from Trusting Connections’ Co-Founder and Co-Owner, Rosalind Prather.
Nanny Tax + Misclassification
Did you know the IRS always considers nannies and babysitters as employees, not independent contractors?
Whether you are working for an agency or privately with a family, you should be given a W-2 at the end of the year if your salary or pay reaches $2,100 or more. A common misclassification most nannies and babysitters experienced is being considered as Independent Contractors. An indicator that you have been improperly classified is when the agency or family gives you a Form 1099. As an employee, you should be getting a pay stub that articulate the numbers of hours you’ve worked and the taxes that your employers have paid on your behalf. You should also be entitled to other benefits like minimum wage, overtime pay, and required in some states, paid sick leave.
Why Does This Matter?
So what’s the difference between a W-2 and a 1099? What’s the harm in receiving the wrong form before filing your taxes? It hurts you more in the long run than you think
1) You are being double taxed
Normally, a portion of your taxes should be covered by your employers such as social security and Medicare. With a 1099, you are paying both the income tax you are responsible for paying and the employer’s share as well. So even though a $50,000 job may sound like a sweet deal, you’re looking at a huge cut after you calculate all the taxes you’ll be paying.
2) Employment Verification Issues
If you are paid cash under the table or improperly classified, it can be disadvantageous when you need to verify employment. Income verification is required when you buy a car, rent an apartment, or request for unemployment benefits. It may not be an issue now but can become a huge dilemma in your future.
How To Protect Yourself
1) Do Your Research + Ask Questions
So how do you prep and protect yourself from these legal issues and nuisances? Before getting hired, we encourage you to sit down with the agency or family and review your rights as a legal household employee. If you are currently being paid cash or getting a 1099 at the end of the year, inform and educate them. Give them the benefit of the doubt as some may not be aware of the legalities for household workers.
If the agency or family is not willing to give you proper tax documents, there are ways and actions you can do to better protect yourself. There are two IRS forms you can fill out – Form 4852 and Form 8919, depending on the situation and circumstances.
2) Join An Agency
To prevent and avoid the stress and legal matters, join an agency like Trusting Connections. We employ all of our nannies and babysitters. We follow legal guidelines to ensure our employees are well taken care of. This includes paying the portion of your taxes, getting a consistent bi-weekly paycheck, receiving a W-2 at the end of the year, earning overtime pay, and accruing sick leave (for those working in the state of Arizona).
We Truly Care
As former nannies, we are passionate about supporting and advocating for nannies and babysitters all over the nation. We believe the work you do is so important. Your impact in the lives of families is significant and you deserve to be treated fairly.
We are happy to be a reliable resource for you, whether you are a TC nanny or not. Give us a call or email us for any questions. You can also swing by to any of our three office locations to meet and talk.
Tucson Office: 3390 N. Campbell Avenue #100 Tucson, Arizona 85719
Phoenix Office: 1490 S Price Rd, Suite 210D Chandler, AZ 85286
Dallas-Fort Worth Office: 751 E Southlake Blvd. #122 Southlake, TX 76092
Here are other resources and articles you should read regarding nanny taxes: