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I have been getting paid under the table for months. How do I (and my employer) go about filing taxes so that I am not charged extraneous taxes (like self employment)?

I am a nanny for a private family. I was told that my employment would be on the books, and was just told that they "never got around to it". So I have been getting paid under the table for months. How do I (and my employer) go about filing taxes so that I am not charged extraneous taxes (like self employment)?

I am a salaried employee.
1099 Employees
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Tax Professional Answers

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Betty Williams
Unfortunately, your employer is creating a problem by not reporting your wages.  If you are an employee, your employer needs to withhold and pay over your portion of payroll taxes, along with the employer's portion.

If your employer is deducting the cash he pays to you as a business expense, and he is audited, he won't have the requite supporting documentation to show he properly reported the income paid to you.

There are a variety of problems being created that could result in the employer being liable for the employee's portion of the payroll taxes, penalties or even criminal prosecution depending on the extent of the fraud.  It just isn't worth it - it is best to properly report and pay the correct tax.

If you aren't sure how you should be treated, the IRS has a form you can submit to get an answer from the IRS.  Similarly, if your employer gives you a 1099 but you think you are an employee, there is another form you can file with the IRS when you file your tax return to make sure you receive the benefits to which you are entitled.

Noncompliant employers can participate in the IRS' Voluntary Compliance Program and receive some relief for the past, but taxpayers should make sure they understand the rules and requirements.
Leave a Comment 328 weeks ago

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Michael Cash
As a nanny you are a household employee. If you earned more than $2,100 during 2019 your employer is obligated to withhold Social Security and Medicare taxes from your wages plus any taxes your state requires. This is reported on Schedule H which becomes part of his income tax return. Income tax can be withheld on a voluntary basis. He also has to pay state unemployment tax on your account.
Leave a Comment 14 weeks ago


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