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Laner, MrsLink (& others): a nanny question
Since I know you 2 have done nanning in Fl I was hoping you could give me some info/insight. Sorry if this gets long.
We had chosen an in-home day care for baby dragon (BD) and then found out last week that the lady is having to close due to some issues with her HOA (another long story). I found an ad on CL, which turned out to be the assistant (we will call N) of the lady whose home care BD was going to go to. I have now been in contact with N anbout watching BD in our home as well as her 3 month old baby. She wants to have her own small day care at her place and watch an additional child as well. We are now discussing having her watch BD at our home, while she goes through certification with DCFS to be registered in FL and then once her home is registered we would take BD there to be watched instead of our house.
So I guess my question would be if she is watching BD at our house along with her own child and is not registered with the state, do we have to worry about the tax aspect of having her as an "employee" versus just somone watch our baby at our house and paying her in cash? I hope that question even makes sense. 
I am just new to this whole idea of having someone watch my child in my own house and part of me is still uneasy about having a random person in my house and also having to deal with my 2 large dogs (which she said she was fine with).
Re: Laner, MrsLink (& others): a nanny question
http://www.irs.gov/publications/p926/ar02.html#en_US_publink100086722
Here's what I've found about this in my research. If she is paid more than $1,700 in a year (which I'm assuming she will be), she's considered an employee and required to be taxed. The link above has a lot more information and specifics about what is expected of you as the "employer."
Oh, thanks for the link! Things dealing with the IRA and taxes are always so confusing to me.
ETA: So it look like that for the few months she is watch LO on our house she is our employee but as soon as she starts watching him in her our place she is self-employed and we are no longer responsible for paying taxes on her servivces.
Do you know about how long it will be before she/her home are certified?
If it's only a month or 2, and depending on how much you're paying her per week/month whatever....you may not hit the $1,700 mark at all. So then, it's her responsibility to file that money on her taxes at the end of the year. Not yours to deduct payroll taxes from her checks. (If I understand correctly.) You could ask an accountant to see what they'd suggest for sure.
We are thinking that it will be only a month or 2 before she is certified. Talking to DH about it he mentioned something about if it was longer to hire her as a contract employee where she would have to file a 1099 at the end of the year and would be responsible for the taxes. We do have a friend that is an accountant so I am sure we can ask him about it.
I had another thought entirely. You may want to talk to an attorney about the liability of having another child there under her care. If anything were to happen to that child, I'm assuming that any liability would be hers for being the responsible adult, but the parents could potentially sue you (hence, a claim against your homeowners/renters' policy). It sounds like it has the potential to get messy.
Also, you may want to check with the state that your home would not be considered a home-based daycare since she'll be watching someone else's child too.
Not that I want to be the bearer of bad news, I have just been burned by people enough to think through worst-case scenarios like that.
"My 101 List - Updating asap, I swear!
To my knowledge, you can't treat her as a contracted employee. Nannies, Private Cooks, Private Housekeepers, ect ect ect are all considered "Household Employees". Unless something has changed, you'll have to file for a Tax ID number with the IRS, just as if you were a business, and give her a W-2 at the end of the year.
Like Dolfinn said, so long as you don't hit that $1700 mark, you won't have to worry about it, but if you do, you have to pay half her social security and Medicare (out of pocket. You withhold the other half from her paycheck and pay it quarterly), but she is responsible for the whole of her federal income tax.
The only children that would be at our house would be or baby and her daughter. She wouldn't be watching any additional kids until she registered with DCFS and moved the child care center into her own place.