Think you won't get caught hiring your nanny with out the proper registrations and insurances? Think again.

There are many ways that even an amicable parting between you and your nanny could result in you facing an investigation or audit. Just a few of the ways you could get caught include:

• Unemployment: You terminate your nanny's employment. She's now out of work and files for unemployment benefits. When asked about her last place of employment, she names you. There are no records of you paying employment taxes and YOU GET CAUGHT.
• Workers Compensation: Your nanny gets hurt while working in your home. Now she can't work but still needs to pay her bills, so she files for workers compensation. Because you hired your nanny illegally, you didn't/couldn't get workers compensation insurance, she reports you in order to obtain benefits, and YOU GET CAUGHT.
• Social Security: Your nanny is older and wants to retire. Upon retiring, she claims social security benefits. Her benefits are lower than she expected, and she realizes that for the time you employed her illegally, she wasn't contributing to social security. To obtain more benefits, she reports her employment with you to the Social Security Administration, and YOU GET CAUGHT.
• Taxes: You think you're smart and describe your nanny as an independent contractor responsible for her own taxes. Then your nanny's tax bill comes due and she realizes that she's responsible for both the employer's and employee's share of social security and medicare, resulting in a much larger tax bill than she expected. She complains to the IRS about the unfairness of it all and YOU GET CAUGHT.

Because you must report household employment taxes on your personal federal tax return, failure to pay the appropriate taxes constitutes federal tax fraud. Those three little words subject you to the following consequences:

• Payment of all back taxes, penalties and interest.
• Federal charges of fraud and tax evasion.
• Civil and criminal penalties, including fines, potential imprisonment, and a criminal record. 
• Oh, and by the way, if you advise your nanny not to pay her own taxes, that results in additional charges of fraud and conspiracy, with penalties of up to three to five years, respectively, as well as fines of up to $250,000.
  
  Remember: There is no statute of limitations for failure to report and pay federal employment taxes.

In addition to these penalties, you undoubtedly will pay significantly more in professional fees to lawyers and accountants defending yourself in an audit or criminal prosecution than you ever would have spent paying your nanny legally.

Contact us for a free consultation today.