Nanny-gate

June,

My wife's nanny job brought in approximately $9K this past year, but the wealthy family she works for will not reportedly be furnishing a W2 to her.

Being as honest as we can be, how (or where) can I report this $9K without getting killed on it tax-wise??

I own my own micro-business, and I also work a corporate gig as well. Any feedback will be greatly appreciated! :)

Ryan
AZ


Have to tell you, Ryan. This kind of thing really bugs me. You and your wife are being ripped off! Now, I know that most "domestic" help -- nanny, housekeepers, dog walkers, etc. really need the work and there is a lot of competition, so they will do whatever the "boss" asks. And that usually means not treating the worker fairly.

It's interesting that this is coming from someone in Arizona, that oh-so-anti-illegal-immigrant state. And, of course, we know that many of the domestics who work for legitimate citizens are illegal immigrants whose pay and benefits and insurance coverage are not what the law requires. What happens when the nanny falls down the steps? No workers comp. What happens when the kids grow up and no need for nanny? There's no unemployment compensation. You get the picture.

So, what should you do? I assume you are not going to complain to the Arizona department of labor, now called The Industrial Commission of Arizona. So you must claim the income. It's claimed on a federal Schedule C. On your wife's earnings you must pay approximately 15% in social security tax and medicare tax [that's both the employee's and the employer's share]. You must also pay income tax.

There's no getting around it.

Best,
June