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.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.