You can file form SS-8, in the Internal Revenue Service will determine whether your wife was supposed to receive a W-2, or a 1099. You file this with your tax return. She is responsible for her share of Social Security and Medicare tax, and then the Internal Revenue Service will make a determination on the remainder of the amount that her employer will have to pay. HOWEVER, I want to caution you that this will launch a full employment investigation, and your wife will probably lose her job. Craig W Smalley EA Admitted to Practice before the Internal Revenue Service
A nanny is a household employee and a 1099 is inappropriate. Show the income on Form 8919 with the appropriate explanation and you will pay only the employee half of Social security and Medicare tax. Household employee wages are subject to withholding for Social Security and Medicare taxes but not income taxes unless the employer and employee both agree to withholding. If her employer fires her for this he or she will shoot themself in the foot because your wife can file for unemployment and your state unemployment tax people will go after the employer for tax due.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.