Ask Terry Questions Nanny needs taxable income to get Obamacare insurance

Nanny needs taxable income to get Obamacare insurance

By Terry Savage on March 28, 2017 | Wild Card

I am a full time nanny and have to do my taxes soon. The family I nanny for isn't claiming anything and I technically don't have to file BUT they pay me in checks which is traceable. I do have Obamacare as well. Do I still have to file even if the family isn't claiming anything? I know I will have to create a payment plan through the IRS since I can't afford to owe in full at the moment.

Terry Says

Whoa!  This is a BIG question with huge implications.   I think you understand this, but to be clear, you're asking about the impact of income tax evasion!  Now, I'm not naïve and I know that many people work for cash.  However, this is something that should have been discussed when you started your employment.  For one, if they pay you taxable wagesit means that you will start building your own record of qualifying for Social Security, assuming that it is around when you retire!  But an income would also let you contribute to an IRA, minimizing your taxes and giving you a start on building your own retirement savings.  Now, it really comes into focus because you need to disclose your income to get the Obamacare insurance subsidy. Many families don't understand the implications here.  But you might want to read this article from, which explains all these important factors.  And it will show the family how to create this type of payroll system. I think you should immediately discuss this with the family -- before they file their own income taxes.  Show them this link, or tell them to Google Nanny Tax to find payroll services. Yes, you'll get less in after-tax dollars, and the family will have to pay more.  But it's best for all concerned.  Face up to this issue immediately. PS  It would be nice for them to offer to pay at least half your tax bill!



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