Most times, household employers run afoul of the law by paying their household help “under the table” and not withholding the proper employment taxes. But by paying your nanny legally, and withholding taxes from her pay, creates a trust relationship between you and the government with regard to those withheld taxes. If you withhold employment taxes, and then fail to pay those taxes over to the government, you likewise face substantial liability as a “responsible person” under federal (and most states’) tax laws.
In US v. Hastings (W.D. Mo. 2015), a bookkeeper for a small business who willfully failed to file the appropriate tax returns and pay over withheld employment taxes to the IRS was recently sentenced to 30 months in prison and ordered to pay over $275,000 in restitution.
NannyPay helps keep you legal by making the process of withholding and remitting employment taxes a little easier for household employers. Paying your nanny legally and “above the table” is not just common sense, its the law.