A woman who works as a nanny and housekeeper wrote into the Wall Street Journal recently. Her employers had paid her under the table for years. As a result, at she’s facing retirement with only a miniscule Social Security benefit.
This drives me nuts. If you can afford to hire a nanny or a housekeeper, you can afford to pay her taxes.
Yes, you can.
The employer half of payroll taxes for Social Security and Medicare is 7.65%. The cost of hiring someone to do the paperwork is around $500 a year. (I use the Nanny Tax Company, which charges a $100 one-time set up fee and a $475 annual preparation fee. Each additional employee after the first one is $125.) Those aren’t exorbitant sums. If you can afford to hire help, you can afford to pay the taxes that are legally required as a household employer.
(I’m assuming that your household help can legally work in the U.S. If that’s not the case, well—that’s a matter for a whole different column.)
There’s a line between frugal and cheap. You cross that line when you force other people to pay the price while you save money. The people you entrust with your children and your home deserve better.