Reporting Wages for Domestic Help

Remember the contoversy surrounding the appointment of a Supreme Court judge and other elected officials over the so-called "nanny" tax?

Clients often approach tax preparers with questions regarding compensation for help like nannies, yard men, babysitters and others. The classifications for employees versus non-employees for reporting purposes is a very gray area.

According to the Wisconsin Institute of CPAs, one of the best ways to look at a situation is to think about who's in charge, whose equipment is being used, where the work takes place and how much is being paid, not what the worker actually does for you.

The issue of "control" is the overriding concern, as far as the IRS goes ... if you are setting the work hours, telling the person what to do and generally "controlling" the situation, then the IRS feels the person's income should be reported.


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