Taxes and Politics! May 22, 2013Expert BlogsOff

Two high level political appointees tumbled today from tax problems. As with all the crises our country is facing, opportunity arises. All of Congress needs to take note that complying with tax law is either too expensive or too complicated or both.

I study and work with the income taxes every day in my job. Still, I need an accountant to help me file in the multiple states that stake a claim on my income. I also need his help with my various nanny tax issues.

I have no wonder why politicians – most of whom are sadly, obviously untrained in finance, economics, or taxes – cannot or do not comply. Here’s what I need to do to employ a nanny for my children: file as an employer in my home state, pay unemployment taxes there, assure workers comp protection under my homeowners insurance, add my nanny to my auto insurance, pay her payroll taxes and mine, and, by her recent request, withhold for her income taxes. In other words, I do what a small business must do to provide for an employee.

What can I not do? I cannot deduct the nanny’s income or the associated costs of being an employer in the way any other employer could deduct payroll expenses. Her work allows me to do my work – but I can’t deduct her as a cost of doing business.

So here’s my idea for reducing unemployment, mitigating immigration issues, and improving compliance: let those with earned income report and deduct the income they pay for personal services in their home. The deduction would require me to report the employee – hence removing the temptation to file an undocumented worker. It would assure that these workers are accruing social security benefits. It would make POLITICIANS interested in complying with the tax law.

By Marie Claire Allvine

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