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11 Question about Nanny taxes in general - we just hired our first nanny and I'm trying to figure out all the tax implications. Do most people use a payroll service or DIY the taxes? And how does the mileage reimbursement get reported (or not reported) on end-of-year tax forms?
14 Most families I work with use a household employee payroll service like HomePay or SurePayroll - they handle all the tax filings, direct deposits, and can properly categorize reimbursements vs. wages. DIY is possible but very error-prone. Properly documented mileage reimbursements (at or below the IRS rate) don't get reported as income on a W-2 or anywhere else - they're non-taxable reimbursements when done through an accountable plan. That's why documentation is critical - without it, the IRS could reclassify those payments as additional wages subject to taxes.
Just wanted to add one more perspective as a tax professional who works with many families employing nannies. The key points mentioned here are spot-on, but I'd emphasize a few additional considerations: 1) Make sure your nanny agreement explicitly states that mileage will be reimbursed at the IRS rate for work-related driving. This protects both parties and sets clear expectations. 2) Consider requiring pre-approval for longer trips (like day trips to the zoo) to avoid surprise large reimbursements. 3) Keep all mileage documentation for at least 3 years in case of an IRS audit - this includes the logs, receipts, and any app records mentioned. 4) Remember that if your nanny occasionally uses your family car for work trips, those miles obviously wouldn't be reimbursed since she's not using her personal vehicle. The automated tracking solutions mentioned by other parents sound helpful for busy families, but a simple notebook system works just fine too if you prefer to keep things low-tech. The most important thing is consistency and proper documentation, regardless of the method you choose.
I've filed with both Jackson Hewitt and H&R Block, and personally found Block to be marginally better, but neither was great for my situation with rental properties and self-employment income. Ended up switching to a local CPA who charges $400 but has saved me thousands in deductions the big chains missed. Sometimes you get what you pay for.
How did you find your CPA? I've been thinking about switching to one but don't know where to start looking for someone reliable.
I asked other small business owners in my area for recommendations. Personal referrals are usually the best way to find a good CPA. Another good approach is to check with your state's CPA association - they often have directories of members organized by specialty. I interviewed three before choosing mine, asking about their experience with rental properties and small business taxes specifically.
I feel your pain with Jackson Hewitt! I had a similar experience a few years back where the preparer seemed more interested in upselling me on additional services than actually doing my taxes correctly. The lack of attention to detail is really concerning when you're dealing with something as important as your tax return. One thing that really stood out to me in your story is how she got defensive when you caught her mistake with the mileage deduction. A good tax professional should welcome questions and corrections - that's how you know they care about getting it right. The fact that she blamed "the system" instead of double-checking her work is a huge red flag. You definitely made the right call walking out. $389 vs $89 for what sounds like the same level of service (or better with TurboTax) is just not worth it. I've found that the tax software has gotten so good over the years that unless you have really complex situations, it can handle most scenarios better than these chain preparers who are often undertrained seasonal workers.
PSA: If you have notifications turned on in the Chime app, you'll get an alert as soon as it hits! Save yourself the constant refreshing
Same here with Chime! My DDD is March 6th too and I've been checking obsessively š From what I've read, Chime usually releases 1-2 days early but it's not guaranteed. Last year my friend got hers 2 days early but mine only came 1 day early. Really depends on when the IRS actually processes and sends the payment info to the banks. Fingers crossed we see something tomorrow or Tuesday! š¤
Same! This is my first year with Chime and the anxiety is real š Really hoping for that early deposit magic everyone's talking about. Thanks for sharing your experience - makes me feel less crazy for checking every hour lol
That negative account balance is exactly what you want to see! The -$1,789 means the IRS owes you that amount. I went through something very similar last year with my amended return - saw the 291 code appear and then waited about 2.5 weeks before the 846 refund issued code showed up. The internal amendment from November is totally normal - the IRS often processes amendments in stages internally. Nothing you need to worry about there. One thing to keep in mind: even though your account shows the credit balance, there could still be systemic holds or reviews happening in the background. The 810 refund freeze from April might still need to be fully cleared, but often the amendment processing takes care of those automatically. Your next step is watching for code 846 with a specific date. Once that appears, you can count on getting your money on that exact date if you have direct deposit set up. The waiting is brutal but you're definitely in the final phase now!
This is so helpful to hear from someone who's been through the same process! The 2.5 week timeline after the 291 code gives me hope that I won't be waiting much longer. I had no idea that the internal amendment processing could automatically clear other holds like that 810 freeze - that makes me feel a lot better about not getting any letters about it. I'm definitely going to focus on watching for that 846 code now. Thank you for the reassurance that I'm finally in the final phase after all these months of uncertainty! š¤
That negative account balance is definitely good news - it means the IRS owes you $1,789! I went through almost the exact same situation with my 2023 amended return. Filed in August, saw nothing for months, then suddenly the 291 code appeared in January and my refund was issued 18 days later. The code 291 for $2,592 means they've reduced your original tax assessment based on your amendment - essentially confirming that you overpaid and are owed money back. That internal amendment from November is completely normal - the IRS often processes complex amendments in multiple stages internally. Your 810 refund freeze from April was likely related to your original return, and the amendment processing should have cleared that automatically. The fact that you're seeing the 291 code means a human examiner has reviewed and approved your changes. Now you're just waiting for code 846 "Refund Issued" to appear with a specific date. Based on my experience and others I've seen, this usually happens 1-3 weeks after the 291 code shows up. Once you see that 846 code, the money will hit your account on the exact date shown. After 5+ months of waiting, you're finally in the home stretch! Keep checking weekly (not daily - it'll drive you crazy) and that 846 should appear soon.
Ava Harris
One more piece of advice - make sure to keep copies of EVERYTHING you send to the IRS, and send your response via certified mail with return receipt requested so you have proof of when they received it. Also, if the January 18th deadline is too tight, you can call and request a 30-day extension, which they usually grant. That would give you more time to get the proper documentation from the restaurant group.
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Jacob Lee
ā¢This is important! I'd also suggest faxing a copy if possible in addition to mailing. The IRS still uses fax and sometimes processes those faster than mail. You can get a free online fax service to send it.
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StarStrider
I've been through a very similar situation with a payment processor issue, and I want to emphasize something that hasn't been mentioned yet - document EVERYTHING about your employment relationship with the restaurant group. In addition to your W-2, gather any emails, text messages, or other communications that show: 1) You were asked to set up the Square account as part of your job duties 2) You never had control over the funds (they went directly to business accounts) 3) You were acting as an employee, not an independent contractor Also, since the restaurant group was sold to a parent company, try to get documentation of that sale/transfer. This can help establish the business relationship timeline and show the IRS that this was clearly a business operation, not your personal income. If the current accountant doesn't follow through, consider reaching out directly to the parent company's finance department. They may be more responsive since this could affect their tax compliance too. One last tip - when you write your response letter, be very specific about dates, amounts, and the business purpose of each transaction. The more detail you can provide about how this was clearly business income that was misreported, the stronger your case will be. Good luck, and don't let this stress you out too much - these payment processor mix-ups are incredibly common and the IRS has seen it all before!
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Anastasia Sokolov
ā¢This is really solid advice! I'm dealing with a similar CP2000 issue right now and hadn't thought about documenting the employment relationship so thoroughly. One thing I'd add - if you have any old bank statements showing your regular paycheck deposits from the restaurant group during that time period, include those too. It helps establish that you were clearly receiving W-2 wages and not 1099 contractor payments, which strengthens the case that you weren't operating as an independent business. Also, @Lucas Kowalski, since you mentioned the restaurant group had multiple locations with different tax IDs, try to get a list of all those entity names and EINs if possible. The IRS might need that information to properly reassign the income to the correct businesses. The parent company angle is smart - they definitely don't want tax compliance issues from this acquisition, so they should be motivated to help clear this up quickly.
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