Babysitters, Domestic Help and the US Tax Code.

[NJDad]

My God! I just got an e-mail from my accountant regarding the taxes I will be paying covering 6 months of  2004 & calendar year 2005 for my part-time babysitter who watches the kids. The verdict is: $5,500 for the government & $1,150 for the State.

You're probably saying, "NJDad, what's this about? I just pay my babysitter $20 bucks to watch the kids. I have a guy stop by and do my yard work and pay him $50 a week."

To that I say, "Well, as a single parent who is receiving child support, I must hire legal help or else face possible tax evasion charges that my Ex could bring on the next court appearance, and the key word is LEGAL."


Well, out infamous US Tax Code does not allow you to 1099 a babysitter, cleaning person or yard worker, yet you MUST claim them. To quote form 1040:

"Household Employee. Any person who does household work is a household employee if you can control what will be done and how it will be done. Household work includes work done in and around your home by babysitters, nannies, health aids, maids, yard workers, and similar domestic workers"


So if you can't 1099 them as a contractor, then what do you do? Well, good question. Here's what an average homeowner has to do to stay LEGAL in this country:

1) Obtain a Federal Employer ID number (EIN).

2) Get a State Taxpayer ID Number (TIN).

3) Get Disability & Workers Compensation Insurance for your House.

4) Submit W-4's to the Treasury and Social Security.

5) Submit W-2's to each and every babysitter hired.

6) Withhold FICA, State Unemployment Tax & Federal Income tax from the babysitter.

7) Pay your portion of FICA & FWT.

8) Maintain & Submit quarterly and yearly Federal & State forms.

9) Receive multiple letters from the Unemployment Board, the Dept. of Labor and Workforce Development, the IRS and the Social Security Administration. Almost on a weekly to bi-weekly basis.

10) Hire a freaking accountant to figure out this mess.


Now this law unduly punishes the single parent over the normal married household. After all, who in their right mind is going to go through all of this stuff if they are married? It's not like there is a monitored court ruling or bitter ex waiting to rat out the other party. I would just like to know how many politicians are actually hiring domestic help and not going through this onerous process? Some will say, "Well, you should be paying taxes after all you are hiring someone and you are a US citizen." To that I say, "Have you ever paid someone to help out around the house? Also, it should less onerous on a family and something which is evenly levied. After all, a family should not have to set themselves up as a small business to hire a babysitter!"

Apparently, the only way to beat this is to become a State Senator or other politician. It seems that they are all hiring illegal Guatemalan house workers and getting away with it!

You know, I'm probably one of 10 jerks in my state doing this? The other nine are probably also divorced and doing it because of custody issues.

Also, just as a side bar. The money I pay in these taxes alone is 1/2 of what I receive in child support from my Ex, per the State's guidelines. Their mom has $1.2M in real estate and $250K in the bank in securities, but she does not have a job. She originally had the kids and as a matter of avoiding an appeal, the judge did not tamper with her financial settlement or alimony.

I pay her $840/month in alimony and she pays me back $530 in child support. Hence, she pay's the minimum since it is based off of her 'income'. Of the money I get back, half goes to paying these taxes for the sitter. During custody, I said that I had someone to watch the kids for $375/week. But the matter of all these taxes were never thought of, since it was mentioned about 1099ing them. Who would have thought that to stay legal, would be so oppressive?