By Poppins Payroll
If you’ve been paid under the table in the past, you’re not alone and you’re not without options. Many nannies find themselves in informal pay arrangements, often because their employer didn’t know what was required by the IRS. But past informal payments can have real consequences for you, and it’s worth understanding what to do about them.
What’s at risk
When wages go unreported, it creates gaps that can affect your access to unemployment benefits if a job ends unexpectedly, workers’ compensation coverage, Social Security and Medicare credits that build over time, and documented income for rental applications or loans. These protections are ones that workers in most industries receive as a matter of course.
How to catch up
If you received under-the-table wages in a previous year, you can still report that income. Unreported earnings should be filed as “Other Income” on your tax return, even without a W-2. You may owe back taxes on that income, but self-reporting typically results in far fewer penalties than being flagged later. A tax professional can help you work through the specifics.
You can also encourage your employer to issue a corrected W-2 for prior years and get payroll set up correctly going forward. Many families are willing to do this once they understand what’s at stake, for both of you.
Moving forward
Getting paid on the books means pay stubs, proper withholding, and a W-2 at year end. If your employer is ready to set things up compliantly, Poppins Payroll makes it straightforward for them to get started.
