Friday, March 16, 2007

Nannies aren't Indies

Hello June,

I am happy to have found your website. I am going to work for a family as a nanny. I have not done this type of work before, and they will be paying me by a 1099. How do I find out more about what expenses I may be able to deduct in a position like this?

Thanks for your help!
Michelle
Glendale,Arizona


Congratulations on your new job, Michelle.

I do have not good news for you, though. If you are working for one family as a nanny then you are the family's domestic employee. You are not self-employed.

This kind of situation was a big news in the 1990s with a case about Zoe Baird. Since then people have been a bit more careful about paying nannies as legitimate employees.

SmartMoney has a short piece on nanny taxes here http://www.smartmoney.com/tax/homefamily/index.cfm?story=nanny .

Whether you're an employee or an indie, the same expenses are deductible. However, employee business expenses do not give the same tax advantage as do self-employed business expenses. You may get a complimentary list of self-employed business expenses from my website, here .

Best regards,
June

1 comment:

June Walker said...

June --

My daughter graduated from college. She will pursue an acting career this year. She will also take care of children - maybe for 2 or 3 families. If she works for more than one family can she then be considered self-employed and pay her own qtrly estimates? Would this be a Schedule C with actor/nanny heading? Does each family give her a 1099 if over $600 paid, and under the $1500 nanny tax limit?

Thanks.
Pam

Dear Pam,

I am on a hectic schedule. Please excuse the EMBEDDED responses below.

If she works for more than one family can she then be considered self-employed and pay her own qtrly estimates?
-- YES

Would this be a Schedule C with actor/nanny heading?
-- NO, THEY ARE TWO SEPARATE BUSINESSES. WERE SHE AN ACTING TEACHER TO CHILDREN, THEN IT WOULD BE ONE BUSINESS.

Does each family give her a 1099 if over $600 paid,
-- THEY SHOULD BUT THEY USUALLY DON'T. IT'S OK IF THEY DON'T AS LONG AS YOUR DAUGHTER CLAIMS THE INCOME

and under the $1500 nanny tax limit?
-- THE LIMIT HAS TO DO WITH EMPLOYEES [NOT SELF-EMPLOYEDS] AND PAYROLL TAXES. AS LONG AS YOUR DAUGHTER HAS SEVERAL CLIENTS,. IT APPEARS THAT SHE IS SAFE TO BE CLASSIFIED AS A SELF-EMPLOYED.

Best regards,
June Walker