[nutthouse]

I'm considering taking a job as a nanny and the family wants me to claim the income so that they can write it off. They only want to pay $225/week. Is it really worth it if I have to pay taxes? What would I really be making a week?

[mldubose]

Well, for one thing, if they didn't claim it, they would be breaking the law. And they are also supposed to pay your Social Security taxes too. It's about 15% total, and you pay half of that.

You need to be paying into Social Security. Sure, you would make more getting paid "under the table", but what if you become disabled? You wouldn't be eligible for SS disability because of not having enough worker credits.

Plus, for them, being about to claim the child care credit is valuable, depending on their income. And depending on yours, your marital status, and if you have kids, you may qualify for Earned Income Credit.

[Fr_Chuck]

Seveal things, first you have to claim any income you earn on taxes, if they do not hold it out, as being an employee, they would have to do so for you as a independent contractor ( which you really are not) and you would end up paying higher taxes.

While the min law wages very, will you be making min wage, that would be a concern also.

But any job you take will or should have taxes taken out. The taxes coming out of that amount will be very small, depending on your tax status. But there is social security tax ( which they have to match and pay) and they will have to pay unemployment taxes ( not held out of your check that they have to pay) and you pay income tax, which is legally required anyway.

If the wage is not high enough to be worth working that is your issue with the hourly wages being offered.

[twinkiedooter]

You would be essentially an independent contractor responsible for your own taxes. A rule of thumb would be 15% of your weekly salary for taxes. You would not be eligible for unemployment insurance as you would be self employed and after that position ends and you were to take another job elsewhere and went to collect unemployment insurance, the period you worked as a nanny would not count in the calculating of the benefits available to you. If I were you I'd try to get them to do the take out the taxes out of my pay thing and have them pay the employer's portion and go the way of having a true employer/employee relationship. This way at the end of the year you will get money back versus you owe IRS money.

[mldubose]

You can also go to Internal Revenue Service to figure out your withholding amounts. I think SS and medicare is 7.65% together.

You can also try this tool:

Payroll Deductions - Financial Calculators from Dinkytown.net

I am not an accountant, but your SS and medicare will probably be higher than your Federal. You may not even pay Federal Taxes. I'm not sure about State because it depends on where you live and the rates there.

[mldubose]

I don't think you have to worry about the unemployment tax. That is their responsibility. You also must ensure that the Social Security stuff gets paid, or you won't get credit for it. If they're holding it out of your check and not sending it in, then it would not be good for you. They also would face penalties.

Most nannies do not want to pay estimated quarterly taxes so they will opt for employment status instead.

The Nanny Tax (Tax Guide: Personal Finance) | SmartMoney.com

[mldubose]

You would be essentially an independent contractor responsible for your own taxes. A rule of thumb would be 15% of your weekly salary for taxes. You would not be eligible for unemployment insurance as you would be self employed and after that position ends and you were to take another job elsewhere and went to collect unemployment insurance, the period of time you worked as a nanny would not count in the calculating of the benefits available to you. If I were you I'd try to get them to do the take out the taxes out of my pay thing and have them pay the employer's portion and go the way of having a true employer/employee relationship. This way at the end of the year you will get money back versus you owe IRS money.

Actually, if parents pay anyone more than $1600 to keep their kid, they have all of that stuff to pay, whether they want to or not. The only way to get around it is to not claim the dependent care credit. But you might trigger a red flag if the IRS sees both parents working with no child care costs. Who knows?

[AtlantaTaxExpert]

By law, the nanny CANNOT be an independent contractor if she works in THEIR home.

As for the Red Flag noted above, the IRS sees such returns all the time and does nothing. WHY? Because grandparents, siblings, even neighbors take care of kids FREE OF CHARGE all the time, and there is NOTHING illegal about that.