Help me pay my taxes!
June 10, 2010 8:48 AM Subscribe
Is there a way I can force a former employee to give me their information so that I can process my taxes?
I employed a nanny in my home for several months. Unfortunately, I was naive and lazy and didn't get her ssn before she quit without notice. I want to file the proper taxes at the end of the year to avoid any hassle from the IRS, but don't know how I can possibly do that without her vital information. She will not return my calls or emails. Any advice?
I employed a nanny in my home for several months. Unfortunately, I was naive and lazy and didn't get her ssn before she quit without notice. I want to file the proper taxes at the end of the year to avoid any hassle from the IRS, but don't know how I can possibly do that without her vital information. She will not return my calls or emails. Any advice?
It is not just laziness to fail to obtain a social security number from an employee, it is criminal, since you have no way of knowing if the person you are employing is legally in the country or legally has the right to work for you. The refusal of this former employee to return your calls or emails strongly suggests that she is an illegal immigrant who has no SSN to give you. Under the circumstance, you are probably better off simply pretending that you never employed her. Chances are you will get away with it (Big Brother is not always watching you, after all). And never do something like that again.
posted by grizzled at 9:14 AM on June 10, 2010
posted by grizzled at 9:14 AM on June 10, 2010
Are you following the instructions for dealing with paying household employees?
It is implausible that they do not have a course of action you are supposed to take if you do not have someone's proper SSN. Yeah, the docs say you should have gotten it before you paid them the first time. However the IRS would rather you make it right than not.
If you're nervous about contacting them to get information on how to cope with this, you might star with your taxpayer advocate.
posted by phearlez at 9:20 AM on June 10, 2010
It is implausible that they do not have a course of action you are supposed to take if you do not have someone's proper SSN. Yeah, the docs say you should have gotten it before you paid them the first time. However the IRS would rather you make it right than not.
If you're nervous about contacting them to get information on how to cope with this, you might star with your taxpayer advocate.
posted by phearlez at 9:20 AM on June 10, 2010
Response by poster: I am pretty sure she's not an illegal immigrant - she has facebook friends from her high school, and her father owns a local business. They both look and sound extremely local. She won't respond because she's in a snit, and also because she doesn't want to have to pay her taxes. I understand that I didn't go about this the right way - but I honestly didn't know about employee forms, schedule H, etc., until it was too late. I thought that it would be a good idea to get this information from her, but didn't realize it was a legal issue.
posted by LizardOfDoom at 9:26 AM on June 10, 2010 [1 favorite]
posted by LizardOfDoom at 9:26 AM on June 10, 2010 [1 favorite]
As far as the immigration status, it is illegal to KNOWINGLY employ or continue to employ someone in the US illegally. I am not a lawyer or your lawyer, but based on my knowledge of just how rare enforcement is on this matter I would not worry about it if I was in your shoes. Particularly not if I were trying to make the situation right after the fact.
Aside from that, the IRS is not concerned with enforcement of this. While you are supposed to fill out an I-9 verification you are not expected to submit it - you're just supposed to keep it on file.
You can make an effort at getting right with the IRS w/o serious fear of this immigration thing biting you in the ass. Or rather, you're no more likely to be bit in the ass over it because you make this effort to get right than if you try to ignore it. Personally I'd be much more concerned about trouble from paying household help w/o paying their SocSec withholding. (You don't have to withhold their federal income tax unless they ask you to.)
posted by phearlez at 9:28 AM on June 10, 2010
Aside from that, the IRS is not concerned with enforcement of this. While you are supposed to fill out an I-9 verification you are not expected to submit it - you're just supposed to keep it on file.
You can make an effort at getting right with the IRS w/o serious fear of this immigration thing biting you in the ass. Or rather, you're no more likely to be bit in the ass over it because you make this effort to get right than if you try to ignore it. Personally I'd be much more concerned about trouble from paying household help w/o paying their SocSec withholding. (You don't have to withhold their federal income tax unless they ask you to.)
posted by phearlez at 9:28 AM on June 10, 2010
If that's how it is, why not call her dad? Tell him you're doing your paperwork and need her SSN to file and she won't return your calls. Idly say that you'd rather not submit it w/o her SSN and potentially give the IRS a reason to hassle her trying to get it.
He may be too wise for that, but maybe not.
posted by phearlez at 9:31 AM on June 10, 2010 [1 favorite]
He may be too wise for that, but maybe not.
posted by phearlez at 9:31 AM on June 10, 2010 [1 favorite]
Was there an understanding from the beginning of the employment that this is what you would be doing (filing her information on your taxes)? If not, I suggest dropping it, pretending like you didn't employ her on your taxes, and moving on.
My wife and I worked doing childcare during college. It was basically babysitting - paid in cash or individual checks after every session. But we had enough scheduled days/hours set up with a number of families that it sustained us for a number of years while we went to school (paid for by loans and parents). One year, one of the moms (my wife's cousin in fact) asked us out of the blue for our SSNs, stating she was going to file that information on her taxes for the previous year. We explained that our understanding had been that this was completely under-the-table cash-in-hand payments, and refused to give her a SSN. After all, we certainly weren't planning to file taxes on the babysitting money, and no one had ever suggested to us that parent's could claim their payments to us on their taxes (naive on our part). There wasn't even any record of how much she had paid us (since some had been cash and some had been check, and we certainly didn't keep track of it - and know that she didn't). She pestered us for a number of weeks, stating that we were breaking the law by not filing our income as taxes (true), and generally being a pain in the ass about it. We eventually relented and let her use my SSN on her taxes, but didn't file anything ourselves. We were poor college students and didn't want Uncle Sam to take any of our money (not that we could've paid him anyway). The IRS never said anything, and we never babysat for her again (awkward, since all the families we did still work for lived in the same community).
I'm a parent now and for the first time last year filed my taxes with our child care providers' information. However when we started with the providers we explicitly communicated to them that we would be doing this, and got the SSNs/EIDs up front. Probably saved a couple hundred on taxes for it, but I don't know for sure how these things work.
So I've been on both sides of things here; and feel more for the nanny than for you. Non-corporate (kindercare or the like) childcare is one of the only businesses where things are predominantly under-the-table. If you a hire a highschooler to watch the kid on a Friday night when you go out to dinner & a movie are you going to get a SSN and tax information from them? No of course not, because that isn't how childcare works.
I think this is a live & learn situation - make sure to get the vital information up front next time and clearly communicate with the employee how the tax situation is going to work out. This is how it works in the business world - when you start a job you fill out the forms to set up withholding and give up the vitals to do so. Then you get a 1099 at the end of the year to file your taxes with. There is a paper trail the whole time, and both employer and employee know how much has been paid to the employee and how much tax has been withheld so far and so on. None of this was set up in your situation, so I feel like you're just s.o.l.
if i'm reading the question right, this was a in-home/live-with-you nanny, so i understand it is slightly different than my come-to-your-house/babysitter situation, but feel that all my advice still applies
posted by ish__ at 10:34 AM on June 10, 2010
My wife and I worked doing childcare during college. It was basically babysitting - paid in cash or individual checks after every session. But we had enough scheduled days/hours set up with a number of families that it sustained us for a number of years while we went to school (paid for by loans and parents). One year, one of the moms (my wife's cousin in fact) asked us out of the blue for our SSNs, stating she was going to file that information on her taxes for the previous year. We explained that our understanding had been that this was completely under-the-table cash-in-hand payments, and refused to give her a SSN. After all, we certainly weren't planning to file taxes on the babysitting money, and no one had ever suggested to us that parent's could claim their payments to us on their taxes (naive on our part). There wasn't even any record of how much she had paid us (since some had been cash and some had been check, and we certainly didn't keep track of it - and know that she didn't). She pestered us for a number of weeks, stating that we were breaking the law by not filing our income as taxes (true), and generally being a pain in the ass about it. We eventually relented and let her use my SSN on her taxes, but didn't file anything ourselves. We were poor college students and didn't want Uncle Sam to take any of our money (not that we could've paid him anyway). The IRS never said anything, and we never babysat for her again (awkward, since all the families we did still work for lived in the same community).
I'm a parent now and for the first time last year filed my taxes with our child care providers' information. However when we started with the providers we explicitly communicated to them that we would be doing this, and got the SSNs/EIDs up front. Probably saved a couple hundred on taxes for it, but I don't know for sure how these things work.
So I've been on both sides of things here; and feel more for the nanny than for you. Non-corporate (kindercare or the like) childcare is one of the only businesses where things are predominantly under-the-table. If you a hire a highschooler to watch the kid on a Friday night when you go out to dinner & a movie are you going to get a SSN and tax information from them? No of course not, because that isn't how childcare works.
I think this is a live & learn situation - make sure to get the vital information up front next time and clearly communicate with the employee how the tax situation is going to work out. This is how it works in the business world - when you start a job you fill out the forms to set up withholding and give up the vitals to do so. Then you get a 1099 at the end of the year to file your taxes with. There is a paper trail the whole time, and both employer and employee know how much has been paid to the employee and how much tax has been withheld so far and so on. None of this was set up in your situation, so I feel like you're just s.o.l.
if i'm reading the question right, this was a in-home/live-with-you nanny, so i understand it is slightly different than my come-to-your-house/babysitter situation, but feel that all my advice still applies
posted by ish__ at 10:34 AM on June 10, 2010
I think there is a minimum annual amount you have to pay a nanny before the tax issue even comes into play. If she only worked for you a few months than it's possible that you didn't reach the threshold. Here is an WSJ article from 2008 that mentions $1,600 as the initial threshold but I'm not sure how accurate it still is.
posted by victoriab at 11:17 AM on June 10, 2010
posted by victoriab at 11:17 AM on June 10, 2010
The articles links to the 2010 IRS Household Employer's Tax Guide
posted by victoriab at 11:19 AM on June 10, 2010
posted by victoriab at 11:19 AM on June 10, 2010
Response by poster: @ victoriab - she has made over that amount
@ish_ normally I would be on her side, too! But the problem is that she quit without notice for no apparent reason, and after-the-fact we found out that she is extremely dishonest and vindictive. We're just trying to cover our butts, because we're afraid she'll rat us out for employing her under the table. :(
posted by LizardOfDoom at 1:52 PM on June 10, 2010
@ish_ normally I would be on her side, too! But the problem is that she quit without notice for no apparent reason, and after-the-fact we found out that she is extremely dishonest and vindictive. We're just trying to cover our butts, because we're afraid she'll rat us out for employing her under the table. :(
posted by LizardOfDoom at 1:52 PM on June 10, 2010
Who would she rat you to that wouldn't come after her for the taxes? She'd be in as much trouble as you, no?
posted by ish__ at 2:18 PM on June 10, 2010
posted by ish__ at 2:18 PM on June 10, 2010
Who would she rat you to that wouldn't come after her for the taxes? She'd be in as much trouble as you, no?
Probably not.
Ish__ mentions a 1099 but someone doing child care in your home isn't a contractor, they are an employee. The link I provided above to the IRS documentation explains why.
As an employee, they get a W-2, not a 1099 (and that's also why you're on the hook for verifying their being legally able to work. Were you contracting to a business you don't have to fill out an I-9.)
Since the young lady is an employee, LizardOfDoom is obligated to pay social security on the employee's wages. That's 7.5% on top of wages at the minimum, another 7.5% that either LoD can pay out of pocket or - only with prior understanding - withhold from the employee's wages.
So LoD is potentially on hook here for 15% of whatever was paid to this employee. This young woman, from the sound of it, probably doesn't make enough money every year to be on the hook for any taxes after her deductable. Even if she were to decide to blow the whistle on this down the road, unless she owes money to the government she probably won't have anything she has to pay in taxes. Since penalties are a percentage of tax owed, if she doesn't owe anything then she won't be subject to penalties either.
That said, she could be filing her taxes and receiving the earned income credit or the like. In that case she IS potentially in trouble since there is a tax liability. If she's just not filing or not claiming that then it's less likely she'd have an issue.
posted by phearlez at 3:05 PM on June 10, 2010
Probably not.
Ish__ mentions a 1099 but someone doing child care in your home isn't a contractor, they are an employee. The link I provided above to the IRS documentation explains why.
As an employee, they get a W-2, not a 1099 (and that's also why you're on the hook for verifying their being legally able to work. Were you contracting to a business you don't have to fill out an I-9.)
Since the young lady is an employee, LizardOfDoom is obligated to pay social security on the employee's wages. That's 7.5% on top of wages at the minimum, another 7.5% that either LoD can pay out of pocket or - only with prior understanding - withhold from the employee's wages.
So LoD is potentially on hook here for 15% of whatever was paid to this employee. This young woman, from the sound of it, probably doesn't make enough money every year to be on the hook for any taxes after her deductable. Even if she were to decide to blow the whistle on this down the road, unless she owes money to the government she probably won't have anything she has to pay in taxes. Since penalties are a percentage of tax owed, if she doesn't owe anything then she won't be subject to penalties either.
That said, she could be filing her taxes and receiving the earned income credit or the like. In that case she IS potentially in trouble since there is a tax liability. If she's just not filing or not claiming that then it's less likely she'd have an issue.
posted by phearlez at 3:05 PM on June 10, 2010
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posted by ghharr at 9:04 AM on June 10, 2010