Question

Regarding illegal alien taxes, my nanny is an illegal alien and I paid her under the table. She's planning on filing a return and using her individual tax identification number. If the IRS asks who she works for, will I be penalized?

Answer

It’s unlawful to employ an undocumented immigrant who can’t legally work in the United States for childcare. When your nanny files taxes, you might face civil or criminal penalties associated with employing her. You should speak with an immigration or employment law attorney for advice on those issues.

Also, the IRS might penalize you for failing to:

  • Properly report wages you paid your nanny
  • Withhold taxes
  • Issue a W-2

When you hire a household employee to work for you on a regular basis:

  • You must verify that the employee can legally work in the United States as either of these:
    • Citizen
    • Alien
  • You and the care provider must each complete part of a form from the U.S. Citizenship and Immigration Services (USCIS). The form is Form I-9: Employment Eligibility Verification.
  • You must keep Form I-9 for your records. You can get Form I-9 and the USCIS employer handbook by:
    • Calling 800-870-3676
    • Going to www.uscis.gov

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