Any way to avoid Nanny tax?

[arfadugus]

Hi I caretake a special needs kid at his house and his mother pays me each week in cash. (under the counter) I know I need to figure the tax thing out before I get in trouble but is there anyway around it? Its so much money down the drain to pay taxes on 10 dollars an hour, I make around $400-$500 a week.

Can I Somehow start a business and say that his mom is my client? Then write of a things like rent, car, computer, etc. as business expenses then pay taxes only on what I have left? How would I go about doing this?

Someone who knows about taxes please help!

 

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[exclusives88]

Assuming this is in the U.S. The answer is yes, you have to include that income on your personal tax return if you earned more than $400 in the current year. Now, I know a lot of people who do not include it on their personal income because they are paid in cash. That being said, it is totally up to you if you want to include it on your personal tax return.

Business expense has to be ordinary and necessary. It can not be personal expense. Is rent and computer expense ordinary and necessary to run your business? You can claim your business deductions on Schedule C on your tax return.

 

[Iwokeup]

I would just pay the tax. It may hurt in the short term but what happens if THEY somehow get busted on an audit, or if they claim something directly? Then you'll be stuck with back taxes AND penalties.

 

[arfadugus]

Assuming this is in the U.S. The answer is yes, you have to include that income on your personal tax return if you earned more than $400 in the current year. Now, I know a lot of people who do not include it on their personal income because they are paid in cash. That being said, it is totally up to you if you want to include it on your personal tax return.

Business expense has to be ordinary and necessary. It can not be personal expense. Is rent and computer expense ordinary and necessary to run your business? You can claim your business deductions on Schedule C on your tax return.

I havent even been filing a tax return because this is my only job and no other income. Should I call a tax professional or is that a waste of money?

 

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[exclusives88]

I havent even been filing a tax return because this is my only job and no other income. Should I call a tax professional or is that a waste of money?

It is a pretty simple tax return. Many tax software can handle this such as taxact or turbo tax. In my opinion, I wouldn't waste my time with a tax professional. I would use one of these software, read up on business expenses in the below link or publication 535.

Here is an article from IRS related to business expense.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses

 

[wbrett1027]

How would you get caught? If it's under the table... It's not like she's writing it off??


Brett.W
Brettco LLC
Southern Maryland
"If your scared Go to Church, bored get to work"

 

[arfadugus]

How would you get caught? If it's under the table... It's not like she's writing it off??


Brett.W
Brettco LLC
Southern Maryland
"If your scared Go to Church, bored get to work"

Just trying to stay out of trouble really. But she isn't claiming me on her taxes or anything

 

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[AgainstAllOdds]

Step 1: Stop posting publicly in multiple threads that you're "getting paid under the counter."
Step 2: Actually pay your taxes. Your income isn't that high. With standard deductions you'll get most of your money back.

 

[Vigilante]

Step 1: Stop posting publicly in multiple threads that you're "getting paid under the counter."
Step 2: Actually pay your taxes. Your income isn't that high. With standard deductions you'll get most of your money back.

^ this

 

[johnp]

Any way to avoid Nanny tax?

Its so much money down the drain to pay taxes on 10 dollars an hour, I make around $400-$500 a week.

Start making more money and you won't have to worry about avoiding things like taxes.

 

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[wbrett1027]

I know a girl who nannys, she wanted to be honest and do the right thing, so she started getting taxed,
At the end of the year she owed 2k in taxes,
Hope this helps you and leads you in the right direction



Brett.W
Brettco LLC
Southern Maryland
"If your scared Go to Church, bored get to work"