40% of Child Support goes to Federal & State Taxes

[NJFather]

State: New Jersey


Hi,


I would just like to post something which I feel is a bit unfair in our Tax Codes, but am forced to live with. This may possibly affect others during the Child Support phase of trial.


I received residential custody of our four children 18 months ago. During our custody trial, it was never thought that there were tax obligations that would apply to me and not my Ex (since she stays at home). This error caused me to divert 40% of my Child Support to cover them. Since I work and hire a part-time babysitter, I must be legal in the eyes of the law or else my Ex could report me.


The Federal Tax Code states that for me to hire Domestic Help, a part-time babysitter, requires the following:

1) A Federal Employer ID Number (EIN)
2) A State Taxpayer ID Number (TIN)
3) I must W-4 & W-2 any and all babysitters and help I hire.


This also required the following:

4) I had to get Disability Insurance, Worker's Compensation Insurance & Unemployment Insurance for the house.
5) I have to withold standard employee taxes and fees, such as Income Tax & Social Security from my babysitters.
6) I have to match Social Security and so forth.
7) I had to hire an accountant to handle this mess since I did not realize this until the weeks before tax time.


When I applied for these tax codes, I was called by my State's Department of Labor and Workforce Development to confirm the Employer Code I was filing under. There apparently are not many taxpayers in the State who are doing this and they were double checking it!


These extra fees increased my base salary of my help and have incurred a great burden on me. Since I am not a State Senator or Congressman (who all seem to do this) and I have a bitter Ex-wife, I am forced into following the Tax Code that virtually no one else follows. After all, who in their right mind will set themselves up as an Employer and have all of those forms, records to keep and taxes to pay just for a part-time babysitter? Has anyone here ever hired a babysitter on a regular basis? I do not know of anyone else doing this, except for a nominee to the Federal Cabinet, who declined the post and cited this reason?


I wanted to 1099 the babysitter, but this cannot be done. By some perverse thought, the Tax Code states that since we can tell a babysitter how to do their job, they are not a contractor or consultant - thus they cannot be 1099'd.


I've worked in the professional IT field for 20+ years. I have never met a consultant who was not told what and how to code, how to perform their job or the like. When a business hires a contract employee, they want them to perform the task to their standards, guidelines and are routinely supervised to ensure this. I see no difference to a contract programmer and a babysitter being told what the home's routine is and how to handle the kids the best way for the household!


I am a single parent with 4 kids 10 and under. I work 45-50 hours a week and manage a home. These extra task and financial burdens are onerous on my streched salary. It is almost seems that the only people doing this are people who are supervided by the courts or have a bitter Ex. This really punishes the single parent!


When did this change in the law take place?

Why would something be entered which sounds good on paper but is so unevenly enforced or followed?


Thanks,
NJCustodialDad

 

[Snipes5]

If the babysitter watches them somewhere besides your home, you are not required to do all the things you listed above. There is also an upper limit of hours the nanny can work without your incurring employment taxes.

If you make enough money that you can afford a nanny, there aren't many who will be sympathetic to you, but you might try addressing this with your Congressman, as he or she is the only one who can even begin to do anything about it.

Snipes

 

[dallas702]

That's the problem with making the leap from an occasional babysitter to a full time "nanny". That's also why most parents in your position either hire through an agency or take the kids to a center. In either of those cases the business owner takes care of all the paperwork, insurance, taxes, etc. (theoretically). Of course it's ridiculous for the government to be involved in your domestic situations like this, but how else would they be able to squeeze more "revenue" out of every pocket they can find.

The good news for you is that not only is the CS you receive not taxable income on your fed taxes, you can deduct all those childcare expenses you are paying. You can be satisfied a little in that your ex will be paying all that child support with pretax dollars and gets no reduction in income for it. If you are getting spousal support it is taxable income.

Now, if you can get a nanny who also educates your children while there you might be able to convince the court that your ex should pay for 1/2 of that education. Then you'll really see the sparks fly.