IRS Concerned About Nanny tax
Statistics indicate only about 300,000 of the 122 million-plus individual income-tax returns filed last year included Schedule H - the form used to pay social security and Medicare taxes.
In 1999, the law mandates that anyone who pays a household worker $1,100 or more must pay Social Security and Medicare taxes through Schedule H. This minimum will rise to $1,200 for the 2000 filing year.
Experts familiar with this widely-publicized topic believe many don't file because they feel it is unnecessary, too much paperwork, and of course, that they won't be caught. Even though the provisions were enacted in 1994, the IRS says it is continues to look at the nanny tax very closely.