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Thinking about paying your nanny cash? While the idea of skipping taxes and paperwork is tempting, it’s crucial to understand the risks involved. When you hire a nanny, you become an employer, and that comes with tax responsibilities. Paying cash is a major red flag. Read below to learn why paying \u2018on the books\u2019 is the only way to go.<\/p>\n
In 2025, the nanny tax threshold<\/a> is $2,800, meaning if you pay your nanny more than that during the year, you must withhold state and federal taxes. Paying your nanny cash needlessly complicates the process of withholding the correct amount, and the margin for error is large. You\u2019ll also need to consider pay stub laws, which may require you to provide a pay statement each pay period that details wages, rates, withholdings, and more.<\/p>\n Additionally, choosing to pay your nanny in cash, off the books, directly violates employment laws. This action carries severe risks, including serious fines, which can negatively impact your financial stability.<\/p>\n Take Advantage of Tax Benefits<\/strong><\/p>\n Employer taxes for a nanny are likely less than you anticipate. In 2025, childcare tax breaks can save you over $2,000, often covering most of your tax liability. Take advantage of the child and dependent care tax credit<\/a> especially if you have multiple children under 13. You should also use the Dependent Care FSA.<\/p>\n Use our free nanny tax calculator<\/a> for a personalized estimate. But remember, these savings are only available if you pay your nanny legally.<\/p>\n Strengthen Your Relationship with your Nanny<\/strong><\/p>\n Paying cash off the books also hurts your nanny\u2019s future. Without documentation of their work history, it will be very hard for them to qualify for credit, loans, and mortgages, and they\u2019ll lack government assistance, like Social Security and Medicare when they may need it the most. Many of the most sought-after nannies will only work for families who pay on the books.<\/p>\n The easiest way to ensure that you are following all your responsibilities as an employer is to use a payroll service. With EasyPay\u00ae by GTM, we will make sure your nanny gets paid accurately and on time and has the correct amount deducted each pay period for taxes. Paying cash may seem like the easiest route, but the likelihood of something going wrong is just too high. Call us at (800) 929-9213 for a complimentary, no-obligation consultation with a household employment expert, or schedule time with us at your convenience.<\/a><\/p>\n Get our complimentary guide and learn everything you need to know about paying your employees legally and filing your taxes the right way.Benefits of Paying Your Nanny on the Books<\/h2>\n
How to Keep Payroll Simple and Straightforward<\/h2>\n
Download The Complete Guide to Household Payroll<\/h2>\n
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