DEAR HARRIETTE: It is never a good idea for a columnist to give legal advice. I live in California and worked at the Employment Development Department -- the government organization that handles unemployment claims. I am writing about the employer who did not report their nanny’s wages. You said the nanny could not get unemployment. In California, that is not true, and it may not be true in other states as well.
If the nanny files for unemployment and the wages have not been reported, an investigation will be initiated. If the investigation finds the nanny should have been considered an employee, she will receive unemployment, and the employer will have to pay back taxes with penalty and interest. So when asked if a person is eligible for unemployment or disability, I always tell people to apply and let the government make the determination. -- In the Know
DEAR IN THE KNOW: Thank you for pointing this out. Perhaps the biggest lesson you reveal is the liability that the employer has if he or she does NOT report income for a household employee (or any other employee, for that matter). Employers are required to pay income taxes.
Perhaps this pandemic has helped or will help to wake up individuals who have been negligent in reporting income to the government. It simply is not worth it to do that. If you have paid more than $2,100 to someone, you are required by law to report the payment and pay taxes on it.
For more information, go to irs.gov/newsroom/tax-situations-when-taking-care-of-a-family-member.
(Harriette Cole is a lifestylist and founder of DREAMLEAPERS, an initiative to help people access and activate their dreams. You can send questions to askharriette@harriettecole.com or c/o Andrews McMeel Syndication, 1130 Walnut St., Kansas City, MO 64106.)