Tuesday, August 07, 2007

For Tax Purposes...

Christian Schneider writes an essay which is humorous, if you like dark and foreboding humor.

After the birth of our children, my wife was itching to get back to work. In order to accommodate our new schedules, we decided to hire a UW-Madison student to babysit our kids for 10 hours a week.

...Yet when it came time to hire our own babysitter, it quickly became evident there was more to it than just paying out of pocket. For tax purposes, my wife and I had to register and get both state and federal business identification numbers.

From there, we had to pay income taxes, social security taxes, and unemployment taxes on our babysitter (as well as some back taxes, as it took a few months to figure this all out). We had to register with the Department of Workforce development to set up quarterly unemployment insurance payments – despite the fact that if our babysitter were to quit working, she wouldn’t be collecting unemployment. We had to file all the W-2 and W-3 forms with federal and state government to report her income. If you decide to pay the babysitter’s portion of the income tax, naturally that gets taxed too, since it is considered income to the sitter. Despite my wife and I both having master’s degrees (although, admittedly, mine came with the purchase of my 20th case of Miller Lite), we had to hire a professional tax preparer to sort the whole mess out. And this was for someone watching our kids for 10 hours a week.

Of course, the important phrase is "for tax purposes." Had the Schneiders not wanted the deduction, nobody would have cared. Or--maybe more focused--had the Gummints simply believed that they were paying (say) $100./week to Suzy Q to watch the kids, instead of demanding documentation, ...

You get the picture.

Once it has been determined that every single nickel of a taxpayer's cashflow is subject to Gummint audit and cross-checking, the taxpayer's costs rise dramatically--not to mention the costs now incurred by the babysitter, (aka taxes.)

Next time, Chris, don't write it off.

And by the way, my kids take cash for those services. Less than $10/hour. You want to withhold? Find the next competent kid. Maybe they'll take your deal.

HT: Sykes

1 comment:

diana said...

Never in any of my jobs working in people's homes have they ever sought to do this...