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I've been a nanny for over 10 years and I can tell you that legitimate nannies PREFER to be W-2 employees! When families try to 1099 me, I explain that it's misclassification and actually costs me more in taxes (self-employment tax is 15.3% vs the 7.65% that each party pays for regular employment). Plus, as a W-2 employee I get unemployment protection, verifiable income for apartments/car loans, and proper Social Security credits. Being paid properly also means I'm covered by workers' comp if I get injured on the job. The families who do it right are the ones who keep great nannies long-term!
Do you ever help families set up the payroll stuff? My nanny keeps saying she wants to be "on the books" but neither of us know where to start.
I don't personally set it up for families, but I do point them toward resources. Many use household payroll services like HomePay, SurePayroll, or Poppins Payroll that specialize in nanny taxes. They handle all the paperwork, tax withholding, and filings for around $40-60/month. I also recommend they check the IRS Publication 926 (Household Employer's Tax Guide) which explains everything. Most families find that once they have a system set up, it's pretty easy to maintain and gives everyone peace of mind.
Just a quick tip - don't overlook state requirements too! Federal is just part of it. Depending on your state, you might also need: 1. State unemployment insurance account 2. Workers' compensation insurance 3. State-specific new hire reporting 4. Paid sick leave compliance We found this out the hard way after getting everything set up federally then realizing we had state obligations too.
Another option - call the company directly and ask for their accounting department. Often they'll email you a copy right away. Sometimes they've already filed it electronically with the IRS but forgot to mail your copy. I've had this happen twice and both times the company was super apologetic and sent me a PDF version within hours of my call. It's usually just an oversight rather than them trying to avoid filing.
I honestly wouldn't stress too much about this. Just make sure you report ALL your income regardless of whether you have the forms or not. The IRS cares more that you're reporting everything than whether you have every piece of paperwork.
This is true but having the official forms makes it a lot easier if you ever get audited. Always better to have more documentation than less!
If you're eligible for Free File, definitely do that! But watch out for the upsells. I tried TaxAct through Free File last year and they kept trying to upgrade me to paid tiers by scaring me about "audit risk" and missing deductions. One tip that saved me money: public libraries often offer free tax filing assistance through VITA (Volunteer Income Tax Assistance) program. They'll do your taxes completely free if you make under about $60k. The volunteers are IRS-certified and did a great job with my return including unemployment benefits.
Do you need to make an appointment for VITA or can you just show up? And do they file state taxes too or just federal?
You definitely need to make an appointment for VITA services - they book up fast, especially as it gets closer to the April filing deadline. I recommend calling your local library or checking the IRS website to find VITA locations near you and schedule ASAP. They absolutely handle state taxes too! The volunteers are trained on both federal and state returns. Just make sure to bring all your tax documents (W-2s, 1099s, last year's return, etc.) to your appointment. Most locations also offer the option to file electronically so you can get your refund quickly.
Has anyone used H&R Block's free online version? My friend said they have a special promo for people who were laid off but i cant find info about it on their website??
I used H&R Block last year when I was unemployed. Their basic free version is OK but very limited. I don't think they have a specific laid-off promo, but they do have a "More Zero" option that's free for simple returns. But beware they'll try HARD to upgrade you if you have anything even slightly complicated.
Another tip - make sure to keep extremely detailed records of your attempts to get your employer to correct the W-2. The IRS might ask for this information. Each time you contact your employer, document: - Date and time - Who you spoke with (name and position) - What was discussed - Their response - Any follow-up promised If you're emailing, save all communications. If you're calling, take detailed notes. This documentation shows you made a good faith effort to resolve the issue before filing Form 4852.
Thanks for this advice. I have been keeping emails, but I hadn't thought to document the phone calls with this level of detail. Do I need to submit this documentation with my tax return or just keep it in case of questions later?
You don't need to submit the documentation with your tax return unless you're filing by mail and want to include it as supporting evidence. But definitely keep it in your records for at least 3 years (the standard IRS lookback period for audits). If the IRS does question the discrepancy between your Form 4852 and what your employer reported, having this documentation ready shows you weren't trying to misrepresent anything - you were actively trying to get the correct information but had to file with what you knew was accurate. It demonstrates good faith on your part.
One thing to consider - how big is the discrepancy in box 10 and 12? If it's relatively small, you might want to weigh whether it's worth the extra scrutiny that filing Form 4852 might bring.
That's terrible advice. You should NEVER file knowingly incorrect tax information, regardless of the amount. That's literally asking for problems down the road.
I wasn't suggesting filing incorrect information! I was suggesting evaluating whether the correction is material enough to warrant the extra steps. For example, if box 12 is off by $5 due to a rounding error, that's very different than if it's off by $5,000. The IRS itself has de minimis rules for certain reporting requirements. I'm not saying to ignore significant errors, just to consider whether the particular error materially affects tax liability before going through the Form 4852 process.
Holly Lascelles
21 Another option no one mentioned yet is using your tax preparation software if you already have one. I use TurboTax for my personal and business taxes, and they have a section for preparing and filing 1099s. It costs a bit extra but if you're already using the software for your regular taxes, it might be the most convenient option.
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Holly Lascelles
ā¢16 Do you know if H&R Block offers the same feature? That's what I've been using for years and would prefer to stick with it if possible.
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Holly Lascelles
ā¢21 Yes, H&R Block does offer 1099 filing capabilities in their small business versions. You'd need their Premium & Business or Business & Investment packages to access those features. However, if you're only filing one 1099, it might be more cost-effective to use one of the standalone services others have mentioned, since the upgrade cost for H&R Block might be higher than just paying for a single 1099 form processing. The benefit of using your existing tax software is everything stays in one system, which makes record-keeping easier for future years.
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Holly Lascelles
3 Don't forget you'll also need to include the 1099 payments on your Schedule C when you file your own taxes! The amount you paid her is a business expense that reduces your taxable income. Make sure to categorize it correctly (probably as "contract labor" or "professional services").
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Holly Lascelles
ā¢1 Thanks for this reminder! I completely forgot about that aspect. Would this go under "Contract labor" on the Schedule C, or should I list it somewhere else? I've never had this expense before.
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