The Value of Paying – and Being Paid – “On the Books”
Posted on February 1st, 2011 in category Payroll and Tax Tips | 11 Comments
One of the important conversations that we have with new clients to Town & Country is whether they have thought about how they will handle payroll for their new nanny, housekeeper or other household employee. We don’t have reliable data on what portion of household employees in this country are paid “off the books” or “under the table,” but we suspect the percentage is pretty high. So, probably because it’s so common, it may seem as if paying “off the books” is safe – or at least very low risk. But doing so carries some important risks for the family who is employing someone in their home (and those risks can come to pass in some unexpected ways, and means that the employee could miss out on some important benefits. First, here’s the basic law. When a family hires someone to work in their home, they become a household employer. Household employees include nannies, medical caregivers, housekeepers, gardeners, cooks, personal assistants, household managers, etc. By law, these individuals cannot be classified as independent contractors (or, at least, the exceptions are very, very few). As an employer, the household is required by law: 1. To pay federal and state employer taxes, …
