Nanny Tax

This is definitely getting off-topic, and perhaps it's time to close this sub-thread, but (a) no, there are no daycare centers I know of that operate at night, (b) have you looked recently at how much daycare centers cost? (c) it is very hard to find open slots in reputable daycare centers, (d) it is even harder (read, pretty much impossible) to find reputable daycare centers that can take a child for only a few hours a week, (e) we have five kids, several of whom are too old for daycare but none of whom are old enough to leave home alone babysitting for the others, and (f) the reason why we need child-care is because there are other things we need to be doing, i.e., we don't have the time to be driving kids to/from daycare centers.

It seems to me that in this newsgroup it would be appropriate to stick to tax-related issues and reset the urge to offer parenting advice to others.

It doesn't work to offer this service to families who are just hiring a part-time babysitter for two reasons:

1) The cost of providing the service is too high for them to be willing to pay it. 2) Most of them are paying their babysitters under the table and not bothering to do it legally in the first place. I.e., the market segment is too small.

The businesses that do this, are primarily doing it for families that hire nannies for thousands or tens of thousands of dollars per year. If you're paying a nanny $20,000 per year, than $500 to handle his/her payroll doesn't seem like that much, especially when people who hire nannies are busy busy busy and willing to pay a pretty high price to save themselves time and aggravation.

Many nannies *are* "working for a living as an adult." Sure, some of them are just nannying while biding time until something better comes along, but for many, nannying is not just a job, but a career. If they get paid under the table, then it's a career that doesn't earn them social security benefits (and makes their employers ineligible for Federal office :-).

I was responding to, specifically, "Young people prefer to pocket the tax money. But when they are older they'll see this sacrifice as useful."

Someone who would have 40+ years of full-time adult employment starting after being a nanny does not get any benefit I can discern from those extra credits.

Seth

Jon - I can't remember the last time a post here made me want to barf. Your amazing summary brought back some horrible memories for me. For us, it was a DCA (dependant care account) reimbursable expense, up to the $5000 limit, anyway. Phil suggested this was on the IRS to-do list. I hope they get to it. I know "too hard to understand" is not a valid excuse, but compliance would go up ten fold if it were a simple process.

Joe

I suppose that's true, but personally, I consider "not violating Federal and state law by being paid under the table to avoid paying taxes" to be beneficial.

I think that you missed responsibilities under the Personal Responsibility and Work Opportunity Act. And remember this is just to get started. Then you have to also consider compliance with state and federal wage and hours rules--- consecutive hours of work, meal (and other) breaks, overtime, timely payment of wages, etc. In my experience, what's really hard is complying with state law, which tends not to be nearly as well explained, and which isn't covered by anyone in their articles on compliance.

Bill.

All we've seen is that the charge for providing it is high, not that the cost is.

Maybe if there were an inexpensive way to do it legally, more people would.

Which is why they charge so much: they _can_.

Seth

Capitalism abhors a market vacuum. If this service could be provided inexpensively at a profit, and there were people willing to pay for the service if it were inexpensive, then there would be someone offering the service inexpensively.

There is, admittedly, a potential chicken-and-egg problem: would the market develop if someone offered to service it inexpensively?

The reason why I do not think this is the case is because the numerous companies who are offering this service for a lot of money are all in a position to offer an inexpensive service at little incremental cost to them. I.e., they've already got the infrastructure, the staff, and the tools in place to offer this service; they wouldn't have to spend money to make it possible to offer it to families with part-time babysitters for less money.

It's implausible to imagine that none of these companies, who obviously are in the business of finding markets for their services, have thought of this.

It is far more plausible to conclude that there is no tenable price-point, i.e., no price customers are willing to pay at which the vendor can make a profit, or that there simply aren't enough potential customers for the inexpensive service to make it viable.

In short, my explanation for why no one is offering this service inexpensively fits better with the available evidence than yours.

I got the impression that the services you talked to were specifically for nannies. There are similar services that deal with small business of all types. I don't know but I'd guess that a place like that might give you a better deal.

(1) Disability is wonderful benefit should you need it. But after you mid-20s you cant get it unless have some credited work history. Its an age-graded scale. (2) Retirement is also useful. Many women take years off to raise their own families. Scraping together the 10-year minimum work history may require every credit counts.

That would explain why the $20 bill I saw on the sidewalk must have been an optical illusion: if it were really there, someone would already have picked it up. Fortunately, the shopkeeper shared the illusion so it spent just like real money.

Who knows? On the back of news reports about people getting in trouble for failing to do so properly, it might. (Or there might develop a "market" in trading babysitters so that nobody pays any particular one over the limit in a given year.)

But would they see that as cannibalizing their existing expensive services?

Seth