Nanny - tax questions???

[MarkCO]

If income is over $600 annually, it has to be claimed. If they issue a 1099, it would be hard to ignore the implications. You can certainly go to one of the online tax calculators and figure out how much the cost will be in taxes. If she sets up an LLC and takes a distribution as opposed to "wages" you can avoid the payroll taxes and keep it to income taxes. Then she can also deduct mileage and all the other associated expenses.

I have a friend who is a Nanny. The family she works for gives her a prepaid gas card each week. They also give her a prepaid CC each week with their grocery list and let her use whatever the remainder is for her food while working, and she gets to take the "leftovers" home. They deduct those as childcare expenses. Not an endorsement, just how someone else decided to do it.

I'd read the 1099 form instructions first. and make sure that is the form they will file: https://www.irs.gov/pub/irs-pdf/i1099msc.pdf