IRS audit. Now the government is looking through your tax returns to see what else you may up to. If you haven’t done anything else wrong, the audit could just be a hassle. But you still may need to pay back taxes or a fine for not legally paying your nanny. According to The Motley Fool, failing to pay employment taxes can cost on average $25,000 in penalties and interest.
Take the time to do it right. Or, even better, have someone do it for you and save yourself the trouble. You will have peace of mind and may be able to take advantage of tax savings through the Child and Dependent Care Tax Credit and your employer’s Flexible Spending Account.