I never really thought much about whether Au Pairs have to pay US income taxes. I always thought that one of the benefits of using an Au Pair Agency was that the agency somehow dealt with that? Or maybe they don’t make enough money really to have anything to pay? 
I honestly don’t know what the details are.
But someone out there knows about au pairs and income taxes, right?
Apparently the Cultural Care website has information about taxes in the (nonpublic) family area, so CC families may know more about this.
As one Host Mom emailed:
We’ve been in the Au Pair program for nearly three years with three wonderful APs, and this is the first time the issue of “taxes” has surfaced. My AP received a generic email from our LCC as a reminder that April 15th is the tax deadline. None of my previous APs have filed their taxes. Has something changed? Have we been breaking the law for years?
And let me tell ya, having been picked at random to be audited twice in my life, this is one place where I wouldn’t want to bend the rules.
What’s the scoop on taxes and Au Pairs?
Photo: Paperwork yourself to the top by Kirstelisa on Flickr
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From the CC Infosource website: “Au pairs are required to pay income tax with the exception of Social Security. However, depending on the time of year that the au pair arrives or departs, they may not make the minimum level of income required for taxation in that calendar year.”
None of my au pairs have ever done it, although only 1 would have been subject to it with her arrival date. If an au pair ever wants to come back under another type of visa, green card or apply for citizenship someday, I would definitely advise that they file taxes…
Also on my mind…..do other host families deduct as child care expenses the fees pd to the agency? We have been told the stipend itself paid to the AP is deductible, but even our tax guy was not sure about the agency fees. It might not matter in the end. But I am curious what other families know?
I spoke with a tax specialist who told me that the fees to the agency could be included as child care expenses; however, since there’s a limit to the amount that can be claimed, I think the stipend pretty much covers it.
http://www.irs.gov/businesses/small/international/article/0,,id=96420,00.html
A quote:
“An au pair will almost always be a nonresident alien, and will be required to file Form 1040NR or Form 1040NR-EZ to report his au pair wages.”
This is the site where the IRS discusses it. They most certainly have to pay taxes (if they meet the threshold of income for the year) and it is a significant amount — around 10%. My late Jan arriving AP in 2009 had tax liability of $600 on the 1040EZ NR. (Which she chose not to pay, that is a separate post. Her friend filed a 1040 and had liability of $60 — a mistake that will probably come back to haunt her).
You can also use childcare spending accounts (ie, pre-tax dollars) for agency fees.
(Kiplinger’s has an article on their website about this — $3,000 per kid max.)
Our company allows $5000 per family
Seems like the Kiplinger’s reference might be incorrect because this is a federal law (IRS I suppose) and it allows $5,000 to be set aside pre-tax for childcare in a dependent care spending account.
FWIW, my CPA felt that the agency fee would not be deductible because he felt it’s more of a commission to find the AP, not wages paid for childcare provided. I showed him the Flex Spending letter Cultural Care provided and he wasn’t 100% convinced, said the IRS could go either way if it came down to it. In general, this was the first year that this came to my attention, that AP’s are required to file. I think when we first started the program the stipend was so low that it didn’t come up. Have they tightened the rules or something? I can’t believe how very little my agency has to say on this. None of mine have ever filed. They don’t explain this to the girls and they certainly never explained to me that in NJ I am supposed to withhold about 4% of wages for unemployment. My CPA just pointed all of this out. Shouldn’t they be more proactive on this front? My LCC was clueless.
I’m not a tax advisor or anything but from what I have read you can get $5,000 set aside pre-tax (or I guess a tax deduction later) for the au pair’s wages but not agency fees. This is from the guidance my employer provided me.
My understanding is that there’s a threshhold minimum income that must be reached before an individual must file a federal return. The amount for the 2009 tax year was $9350 (sorry, I know I found it on the IRS website somewhere, but now I can’t find the link). At the current stipend level, an au pair who works 46 weeks or fewer in the tax year would not make enough to require her to file a federal tax return. So basically, if your AP arrives in January, she’ll need to file. If she arrives in mid-February or later, she will not. (But if she extends past her first year, she will cross that threshhold during the second tax year.)
But unfortunately the threshold is significantly lower for nonresident aliens and they’re filing on that form. The deduction is only $3650 according to my CPA. That’s in the above link from the IRS that above posted gave.
During my application process with two different agencies, nobody mentioned that I will have to pay taxes..
Because it’s super logical! If you work in the US for a year, you basically have to pay your taxes!
I think we should be clear here when discussing the tax responsibility. It is my understanding that the AU PAIR is responsible for filing a federal income tax return. The AU PAIR is then responsible for any taxes due, not the host family. This from our LCC this year.
Yes…but I think even that is a surprise to the AP and the HF’s.
None of our APs have ever filed, and I don’t think the agency has spent any time explaining to them whether or how to file. I think the agency and LCC should explain to the APs what is expected – otherwise there is no way they will know – I certainly didn’t,
While none of my APs was ever informed that she would need to file before this year (I have an August arrival, so not an issue this year), it seems to me that the APs should be able to deduct the cost of their education, which must in nearly every instance, exceed the $500 stipend we’re required to pay.
I think it is incumbent on the agencies to assist the APs — gratis (isn’t that what we’re paying those hefty program fees for?) on maximizing their return, and when it’s required. Surely some countries have a no-tax agreeement with the US, regardless of Visa (I remember when I was a grad student that English teaching assistants were not required to file tax returns, while the rest of us were – but we were also having taxes withheld and they were not).
Is this a new law or newly enforced?
SD, I totally agree that this is a place wher Agencies should take the lead, and not just say ‘ooh, we aren’t responsible.’ I understand that laws are different in every state, but at least they could post the info about federal income taxes. Hrrumph.
I completely agree about this. I remember asking our LCC about this issue, and the standard response was “we can’t give any advice”. Not any advice, ok – but how about at least some pointers — even a reprint of what the IRS says?? Drives me nuts.
Our first au pair owed taxes when she extended and was here a full year. She seriously debated not filing at all, but we convinced her to do it rather than risk her ability to return, later. (her unpaid speeding ticket is another story, however).
With our current au pair, I advised her immediately to put aside 10% as much as she can to help with the tax burden – and if she doesn’t need to pay, then it’s bonus money. She hasn’t done this, but I tried. I have NOT ever offered to withhold for them.
I’m a repeat au pair and nothing was ever said to me by anyone during my application process either time or in 2004 when i came over the first time. I’m with CC and in their infosource this is what they have
“The U.S. Internal Revenue Service (IRS) does require au pairs to file a tax return showing their income received from their weekly stipend.
Cultural Care Au Pair is not able to advise au pairs and host families on their requirements to file taxes at the local, state or national level. We ask all au pairs to check with the U.S. Internal Revenue Service regarding federal tax filing requirements at their website http://www.irs.gov (search term “au pair”) or on the direct page at U.S. Internal Revenue Service
So according to the IRS website i’m supposed to fill out a 1040ES-NR form and pay taxes.
Does anyone know how much i’d have to pay and what’ll happen if i don’t fill out the form?
From: http://www.irs.gov/businesses/small/international/article/0,,id=96420,00.html
Topics covered:
-Social Security and Medicare Taxes
-Income Tax Withholding
-Federal Unemployment Taxes (FUTA)
-Income Tax Filing: An au pair will almost always be a nonresident alien, and will be required to file Form 1040NR or Form 1040NR-EZ to report his au pair wages. As a nonresident alien he is ineligible for the Earned Income Tax Credit, the Hope Credit and the Lifetime Learning Credit. An au pair is not really a “student” in the United States, and therefore is not eligible to exclude his au pair wages from gross income under the student article of any U.S. income tax treaty. An Au Pair who is a nonresident alien is not required to file a U.S. federal individual income tax return if his only U.S. source income is wages in an amount less than the personal exemption amount (Refer to Publication 501).
As an addendum to the above — the personal exemption is very low for the non-resident alient.
I think it was about this time last year, when the topic “taxes” started to come up. I asked my LCC about it and she just told me: Noone ever paid, so don’t. ^^ My HF had the same opinion so I didn’t. Some of my friends did, others didn’t.
I’m really disappointed with the way the agencies handle, or better say NOT handle this topic. We really tried to find out what we had to do, but it seemed that wherever we asked, we got a different answer.
A lot of AuPairs never had to deal with taxes before, because in their home countries they didn’t have to. So you feel kind of left alone.
From what I experienced, most HF don’t know what to do either, so I really think the agencies should do something about this!
I guess the big question is whether it could realistically catch up with an AP who tries to return on a tourist or other visa in a few years? My LCC said one girl was stopped at the airport on her way out for not having filed which leads me to think that the family had filed something on her behalf and not shared that fact with her. Otherwise, I wonder how it would catch up with the immigration folks?
I didn’t do it for the year i was here in 2004 and came back on the visa waiver program for a holiday in 06 and then again as an au pair last Feb and nothing has ever been said to me about it.
I haven’t filed my own taxes for the year, but I think we will need to list our APs SS# as the reciept of our money. I think the IRS could find out that way how much she was paid and that she didn’t file taxes.
We had 2 au pairs (one for 2 years, the 2nd for one). Each year, I elected $5,000 in my company’s Dependent Care flexible spending account and I was able to get the full $5,000 worth of my au pair’s weekly stipends and the agency’s fees (pro-rated to a monthly amount) reimbursed. On the Dependent Care account, I had to list the Social Security numbers of my au pairs (both received them), provide receipts they had signed, and a photocopy of the letter that agencies will write you for this purpose, listing their tax ID, the name of the au pair, her term with you, etc.
I use TurboTax software to prepare my taxes. Each year, on my tax return, on IRS Form 2441, I have to account for how I have spent the $5,000 in my Dependent Care account (otherwise it’s not a tax-free benefit). TurboTax required me to enter in the names of all childcare providers and their tax ID numbers, so I always listed the name of the au pair, her Social Security # (in the overlap year I listed both), as well as the agency, and the agency’s childcare tax ID number, as well as the total childcare spending to that provider in that tax year.
I did not seek the advice of an accountant, but each tax year I checked whether the cash total we paid in that calendar year to the AP in stipends exceeded the minimum income amount for single individuals to file, and that was never the case, so the AP never filed and I felt OK about it. Now bear in mind, we had APs from fall 2006 to fall 2009, which is mostly before the full stipend raises in the State Department took effect. I haven’t done the calculations, but I think that maybe under the new stipend an AP fully employed in one tax year may pass the minimum filing threshold.
p.s. Whoops, we didn’t catch the “non-resident alien” twist to the minimum federal income filing threshold, so may have to go back and look at that again… But in terms of the dependent care reimbursement, the benefits agency that administers that plan never gave us any difficulties.
We used CCAP for one AP, and APIA for the other, and both agency fees were reimbursable from the FSA. I got a better letter from CCAP.
As far as the fees to the agency goes, I think it depends on the agency. Our CPA specifically stated that he agency we use (APIA) is different (don’t ask me how) from some of the others, something she knew from the days she used APs. I do know our agency fees are deductible.
As far as the AP’s taxes go, until this year, it was NEVER mentioned to us or to the APs. I can only think that there had either been some change or some new effort to enforce previously existing rules. It has come as a surprise to both our AP and us that she needs to file. She was just at a cluster meeting and the LCC provided everyone with a very fast tutorial about filing taxes along with a generic “how much did you earn” list. None of this information has yet to be shared with the HFs, so unless the APs are sharing the meeting topics with them, there is no way to know what is happening.
In addition, while our current AP has money saved to pay, I can promise that had this come up last year with our first AP, she would not have (not that I think she would have paid anyway). It probably is something that should have been mentioned in the beginning of the year so APs know to save money.
Also, the amount the AP claims and the amount the HF claims needs to be the same or someone will have a letter from the IRS trying to rectify (when they match the SSNs). Another reason it would have been very helpful for the agency to mention this to the HFs.
It is also new to me this year that the AP’s must file returns. (I think this is a change from the agency.)
I vaguely recall that the fact that the families don’t pay taxes on the AP stipend was a selling point to the AP program over a nanny. I believe all I had to do in the past was claim the childcare expenses by SSN or TIN for the agency, the AP and the pre school – which of course was greater than the $5k limit. In the past I never coordinated with the AP about having the exact figure correct between what I filed and what she filed. I hope that is all I have to do this year!
Before we talked with an agency, we went to our accountant and lawyer. On their advice we got an employer tax ID (TIN) from the IRS. Every year we issue a W-2 to our AP’s using our employer TIN – not our social security number. We figure out the correct withholding amount by actually completing the 1040 EZ NR for them (non-resident tax return) and then we issue a W-2 to them. We pay the federal withholding amount on our tax return as a household employer. We do not withhold any money from our AP’s so we are covering their withholding amount. Several times the Social Security agency has written requests asking why we do not withhold/pay medicare and social security taxes and a couple of times the PA Dept of Revenue has asked for clarification on our “employees”. The IRS has audited us once (ah, the joys of owning a business!!), and we had no problems.
We leave it up to the AP on whether or not to file, but we encourage them to do it because we are not sure if it will affect their ability to get a visa to come back to the US.
Wow. It had never occurred to me that our AP would *not* have to pay taxes. We are with Au Pair Care, and they have stressed from the beginning that she would be required to pay. That was even conveyed to us in our first meeting with our LCC after our AP arrived in August 2008. She extended for a year, but even for 2008, she filed (owed $21 that year). This year, it seems the problem is that the stipend has increased enough that the tax liability is quite a bit higher. In the previous APC literature, it stated that most au pairs would owe approximately one week’s worth of pay. This year, though, it is over $600.
I helped our AP complete the 1040NR-EZ and write the check. We get regular emails from AuPairCare national, and from our LCC about the requirement that APs file taxes. It has never been suggested or implied that this was optional for our AP.
interesting, I, too am with aupaircare and this was NEVER mentioned. We use an accountant every year, and never has this come up. None of our au pairs have ever filed a tax return, but they also arrive midyear. Now, on another front, if your AP arrives, say in Sept, and they are gone the following Sept, why should they file the following April for the bulk of the 2d calendar year when they are already back in their home country? Silly, huh?? So, NO our AP will not be filing. And, since we use flexspending, we can’t even get a tax credit on the AP because it is pre-tax benefit- you can’t do both.
We received an email from AuPairCare about taxes in early 2009. My LCC mentioned it again when our new au pair started last summer and gave her a log to complete with a record of her pay that she’s supposed to file with her taxes. I encouraged her to file, but left it up to her.
So the exeption for non-resident aliens is $3650 — that means if they are hear more than 4 months, they should file.
Income Tax Withholding
Because au pair wages are paid for domestic service in a private home, they are not subject to mandatory U.S. income tax withholding and reporting on Forms 941 (PDF) and W-2. However, au pair wages are includible in the gross income of the recipients, and au pairs are required to file U.S. individual income tax returns. At the current wage rate it is likely that the au pair will have an income tax liability on his U.S. individual income tax return because nonresident aliens (with certain exceptions) are not able to claim the Standard Deduction. For this reason it is recommended that the au pair take one of the following two steps:
File and pay U.S. estimated income tax payments on Form 1040ES-NR (PDF) during the year; or
If both the au pair and the host family agree, file Form W-4 with his host family, indicating on line 6 of such form that the au pair voluntarily wishes a withholding amount of U.S. federal income tax deducted from his weekly au pair wages.
(my comment was truncated, sorry!)
I was an au pair with AuPairCare many years ago and nothing was ever mentioned about paying taxes. I have used the same social security number upon my return to the USA years later and never had any issue.
The IRS website (http://www.irs.gov/businesses/small/international/article/0,,id=96420,00.html) says that au pairs are no usually subject to taxes but required to file?
SSN & Medicare: “Au pair wages are not usually subject to social security and Medicare taxes because of the au pair’s status as a J-1 nonimmigrant and as a nonresident alien. However, if the au pair had previously been in the United States as a student, teacher, trainee, or researcher in F, J, M, or Q nonimmigrant status, then the au pair might be a resident alien during his current stay in the United States, and might be subject to social security and Medicare taxes if his annual au pair wages exceed the applicable dollar threshold found in Publication 926.”
Income Tax Withholding
“Because au pair wages are paid for domestic service in a private home, they are not subject to mandatory U.S. income tax withholding and reporting on Forms 941 (PDF) and W-2. However, au pair wages are includible in the gross income of the recipients, and au pairs are required to file U.S. individual income tax returns. At the current wage rate it is likely that the au pair will have an income tax liability on his U.S. individual income tax return because nonresident aliens (with certain exceptions) are not able to claim the Standard Deduction. For this reason it is recommended that the au pair take one of the following two steps:
1) File and pay U.S. estimated income tax payments on Form 1040ES-NR (PDF) during the year; or
2) If both the au pair and the host family agree, file Form W-4 with his host family, indicating on line 6 of such form that the au pair voluntarily wishes a withholding amount of U.S. federal income tax deducted from his weekly au pair wages.”
As far as the host families are concerned, both program fees and weekly stipend are eligible as tax deductible childcare expense.
An agency can help both host families and au pairs with any information they need to file accurately (like the tax ID number of the agency, letter…). Cultural Care Au Pair’s infosource has some basic information to provide some guidance but recommend seeking the help of an accountant or tax software.
Former FrenchAP — the language isn’t very clear if you don’t understand the US tax terms.
Social Security and Medicaid are a special tax (a pure percentage)that comes out of most people’s pay checks. APs do NOT have to pay that.
Income tax is paid based on a percentage of what you make, but it is very complicated, you have deductions for certain things, and the percentage is different for different people. Because one usually pays a lot of tax every year, most employers withhold money from every paycheck. At tax time, you calculate what you owe and what you already paid, and you either pay extra or get money back. Au Pairs do not have taxes withheld (according to the above quote from the IRS).
To translate the stuff you quoted above (which is from the IRS, I’ve seen it too) : you are not required to pay SS and Medicare, you are required to pay income tax, but your employer doesn’t have to withhold it for you throughout the year.
Just something quick- and I hope it’s not been mentioned one or one too many times in the comments, already.
Until some years ago, au pairs never had to pay taxes, since with the 139$ per week they earned, they weren’t able to get over some amount of money.
Now with the weekly stipend being raised during the last 2-3 years, it’s different.
As far as I know, nobody is really sure about if au pairs have to pay taxes, if they should or whatever. It’s a huge controversity, not only here at aupairmom.com, but also on websites for au pairs and even the agencies and LCCs give different advice. :-?
It’s true, there’s a lot of conflicting information.
I tell my APs about income tax, I warn them they might have to pay it, I tell them that I’m not quite sure and there appear to be many conflicting opinions. I tell them that the government may not really care or notice, but that if they ever want to come back to the US in the future, it could potentially be an issue. I then prepare a 1040-NR-EZ for them (since it’s easy for me to do, and it’s not really a skill I think it’s worth teaching to someone who might have to do it once :), give it to them, and leave the decision up to them.
It was never a suprise to me that au pairs have to file a tax return and pay taxes.
Both agencies I have used (AuPairUSA or Interechange, and Au Pair Care) emailed families and au pair in advance with information, directions and the tax form. It is a 1040NR EZ, simple to do. Only one of my four au pairs (the present one) chose to file taxes. My job is to make sure they have the information, offer my help in filling out and filing, and it is their decision if they want to do it or not. I don’t think IRS is going to pursue them for a few hundred dollars, but I tell them that if they want to come back to America in the future, not filing can hurt them.
ExAP,
you maybe wish it were a controversy. No, the law is clear, and au pairs have to file tax returns and pay taxes if they are liable.
The problem is that some coordinators or agencies don’t do a good job informing the parties involved of the law. I am not sure it is really their job, but the good ones do.
Even $130 per week would get you over the tax-free minimum for nonresidents in many cases, so this law has always applied to au pairs.
But how come there was never a tax issue before the stipend raise?
Au pairs earn the minimum waige, does this have something to do with it?
Oh, maybe it is because the au pairs from my country, Germany, usually arrive in the summer. As taxes conut for 1 whole calendar year, it’s only a maximum of 6 months each calendar year.
Do you know what I mean?
There was always a tax issue; if you didn’t know about it, doesn’t mean it wasn’t in place.
This year a taxable amount would be the stipend minus $3650, so if the au pair say had 6 months at $130/week, that would put her earnings at 26 weeks x $130 = $3380, so yes, it looks like below the taxable amount for 2009 (but keep in mind that the deduction rises a bit every year, so in the years when au pairs earned less, the tax-free amount – deduction – was also less). But in any case it was probably cutting it very close.
But if the au pair arrived more than 6 months before the end of the year, she would be liable for some tax even at the old stipend rate.
A couple comments. One, to the host parent (Janet) whos lawyer and CPA has them issuing W-2’s to their Au Pair – if my reading of everything is correct, you should revisit this as it appears to be completely unneccessary., so not sure why your accountant would give this advice – my hunch is, he is unfamiliar with the program. I think the only reason to deal with a W-2 and an au Pair is to help her withhold taxes, as per below, but it seems very unnecessary:
Because au pair wages are paid for domestic service in a private home, they are not subject to mandatory U.S. income tax withholding and reporting on Forms 941 (PDF) and W-2. However, au pair wages are includible in the gross income of the recipients, and au pairs are required to file U.S. individual income tax returns. At the current wage rate it is likely that the au pair will have an income tax liability on his U.S. individual income tax return because nonresident aliens (with certain exceptions) are not able to claim the Standard Deduction. For this reason it is recommended that the au pair take one of the following two steps:
File and pay U.S. estimated income tax payments on Form 1040ES-NR (PDF) during the year; or
If both the au pair and the host family agree, file Form W-4 with his host family, indicating on line 6 of such form that the au pair voluntarily wishes a withholding amount of U.S. federal income tax deducted from his weekly au pair wages. The host family will report and pay over this withheld federal income tax on Schedule H of Form 1040. The host family will also issue Form W-2 Wage and Tax Statement to the au pair to report his au pair wages and income tax withholding. The host family will need to apply for an Employer Identification Number (EIN) if it decides to withhold tax and file Form W-2.
For host families that get the dependend day care from work, the US Gov’t maximum is $5,000 per family, so you should be taking the entire amount. If you take this benefit, you will not qualify for the child-care tax credits. But, in the end, your savings is greater by taking the $5,000 as opposed to taking the dependednt care credit.
My accountant simply listed Au Pair in America fees and tax ID number on the form that we fill out to prove why we were able to use the dependednt day care account – no need to mention the Au Pairs name or social at all.
Now, as for the Au Pairs, I too was frustrated by the agency’s unwillingness to provide guidance here. My question is, what happens if the Au Pair doesn’t file? Now, based on my post about hours, I know there are a lot of readers on this blog who never speed, always recycle, etc, but taking aside the legality of filing, what happens to an Au Pair who flies home this year, and doesn’t file a 2009 tax return? I worry that for them, it could hinder any future ability to travel to the US, but i am merely speculating. Anyone have real insight here?
None of our past AP’s have ever filed taxes, and they have all been able to come back and visit the US with no problems. That being said, as everyone has pointed out with the stipend raised the way it is, this could be more of an issue going forward than ever before.
I really think that if an au pair ever wanted to come back on a work visa, get a green card or citizenship, she should pay her taxes while au pairing, it’s just one more thing you can get dinged on. And having been through all these processes myself to get US Citizenship, you want to be as clean as a whistle.
None of our APs have even gone to get an SSN. I suppose they will need it if they are going to file. There is nothing else that requires an SSN – not getting a bank account, driving on an int’l license or taking classes, at least in our experience. A few have come back to visit, and they encountered no problems.
My APs need SS# to get bank accounts. I think that was part of the patriot act??
Our local Bank of America has always required SSNs to open au pair’s accounts. But I have friends whose au pairs never get theirs.
Generally, we’ve found that getting them a SSN makes life smoother overall. No hassles at the local college, at the bank, at the DMV, etc. It seems to make everyone more secure that she’s legitimate. So, we spend the 2 hours at the SSN office each year getting one for each au pair.
Our state requires the envelope that the SSN came in for non-resident aliens to get a driver’s license. One AP threw out the envelope and the MVA official told her it would be extremely difficult for her to get a license. (She only stayed one year and used the driver’s license from her home country and never had a hitch.) All of my APs get SSN (and after the first AP, I have learned to let them find the office themselves). Our local banks let APs open bank accounts without one. Our local college gives APs a separate college ID number if they have not yet received their SSN.
We have never had a problem opening a bank acct without an SSN. We tell our APs we will take them to get an SSN if they want. One wanted to go get one, but it was so she could apply for a job in the mall and after we told her it would be used to tax her ILLEGAL wages and jeopardize her visa at best, she decided not to get an SSN (and not apply for a job at the mall).
Now that I have read all of these comments I am wondering about those families that have been able to use the dependant care account for agency fees. The guidelines that my employer has provided state that I cannot use the account for agency fees but I can use it for au pair wages. This guidance is essentially summarizing the tax code. I’m wondering if this is wrong or if others have found another way? although it probably doesn’t matter because the au pair wages are more than $5,000 which is the limit for this account.
Our LCC just shared information that she gave to APs in a recent monthly meeting by global email to both APs and HFs. It seems that the IRS has decided to enforce what has been on the books for years, and the agencies are now making APs aware that there could be reprecussions for failing to file. Our LCC is urging all the APs in our cluster to file, even if their 2009 earnings fall under the taxable limit, as proof that they complied with the tax law. Under her estimation, even APs who arrived in August would still need to pay a small amount of taxes, while APs arriving in January 2009 would have to pay a much larger sum.
She encouraged all the APs in her cluster to keep a record of their payments, especially if the HF rounds up their salary (we do – we pay in cash and we’re not going to count out $195 and pennies, we give our AP $200 – ironically slightly less than we paid our first Extraordinnaire in 2000!).
APs do need a SSN to file.
She did not say that APs would be punished for failing to file, just that they might.
My au pair told me that her March cluster meeting was going to be about taxes. I took a suggestion from another post and filled out the form for her. Took about 15 minutes. Late August arrival owes $0 for 2009. But she will owe roughly 1.5 weeks stipend for 2010. Our LCC tells the au pairs to get an SSN. I don’t know that all of them follow through on this, but we require one so we can use it on our dependent care account forms.
What is the saying the only unavoidable things are death and taxes? My agency had on their website information that the AP “may” have to file taxes, but we also told our AP that when she arrived and told her to withhold approximately $600.00 for taxes. I think most agencies don’t give out specific advice for legal purposes and tell HF to consult an accountant or tax advisor. I agree with that, because taxes can be confusing. Basically, the AP doesn’t have to file their taxes if wages were less than $3,650.00. (States vary). A 1040 NR EZ can be used (if there is no bank interest earned) and no need to itemize and deduct such items as education. The AP will simply not have enough to deduct and should just take the standard deduction. A SSN should be obtained, because the AP is obtaining wages in the U.S. and they are to be reported to the IRS. I completed our former AP’s form for her and told her to write out a check and send it in. That is the law and I certainly would not tell her to come here and break U.S. laws. As to what could happen if she chooses to not pay, probably nothing, especially if she leaves within two years and does not return. Other than that, she is basically susceptible to the very same thing most of us are if we do not pay taxes (if we are caught), fines, penalties, garnishment and in the most extreme cases jail.
As an LCC, I cannot give tax advice as I am not qualified/allowed to give tax advice. However, I can do math for my own enjoyment: $195.75 x 52 = $10,179 – $3650 = $6529 x 10% = $653/52 =$12.56. (That was fun! $12.50 seems like a good amount for someone to save per month for some unknown reason.) Disclaimer: This is just a math calculation and does not actually qualify as actual advice for anyone at anytime or for any reason. :)
I meant save per week for some unknown reason! Already making mistakes… Do not take my advice here! :)
I understand you personally cannot give this kind of advice. However, your employer most certainly can and should.
Our agency, EurAupair, hasn’t said boo about taxes to the au pairs or to the families. Everyone I speak to there says “this is the first time we’ve heard of au pairs paying taxes”. Our au pair was never told she’d have to pay taxes before she signed up to come to the US. And when she went through orientation, she was told that she DIDN’T have to pay taxes. She has no SSN, and no TIN, and now it’s 10 days before tax day and we’ve found out through Cultural Care that indeed, au pairs pay taxes. (We’ve signed up with Cultural Care for our next au pair, and we’re a first time family.) It’s too late to get a TIN on time, so now she’s going to have to pay penalties and interest, too. I blame the agency 100%. Sure, they’re not tax advisors, but what would it take to send an email in February, well before tax season, and say, “Hey, your au pair may have to pay taxes. Here’s the IRS page. Consult a tax professional.” ?? This really angers me. Our au pair is going to owe between $800 and $1000! She doesn’t have this money just laying around in her room!
I’m an aupair with Eur Aupair, and I’ve been in the states for 20 months & I’ve never heard about this tax thing… BUT the first thing I did when I came to the states was getting a SSN because friends from other agencies told me that you have you have a SSN. and I mean you use the SSN for everything, bank account & driver license & so on.!!
Think you made the right choice changing agency, because as an aupair with Eur Aupair I would NEVER EVER recommended Eur Aupair to anyone… I’ve been treated like shit, they just make you pay them & do whatever they tell you to do, but when you need help with stuff they are suppose to help you out with they just leave you out there in the dark, they don’t give a shit!
BUT MAKE SURE YOUR NEXT AUPAIR GETS A SSN WHEN SHE/HE ARRIVES.. IT DOESN’T COST A THING & SHE/HE WILL NEED IT ANYWAYS… :) GOOD LUCK…
Well I worked in holland as an au pair and I never had to pay tax. If your getting cash in hand maybe not?
I am a CPA but doesn’t have an answer to this. Do the aupairs qualify for the “making work pay credit”?
They don’t qualify for any of the income tax credits (HOPE, etc) From the IRS site “nonresident aliens and those who can be claimed as dependents on someone else’s income tax return are not eligible for the Making Work Pay Credit”. APs file the 1040NR so I guess they would be considered nonresident aliens
This is an area where I think it’s a lot of phoeey that the agencies claim they don’t give tax advice and leave it at that. No, you recruit these women, taken on the responsibility for making sure they follow US laws — one of which would be tax — and get paid to do it. So go do it. Don’t throw it back on the host families and au pairs to figure it out. The agencies can quickly and easily do the math based on arrival dates they set and send out a form with a reminder. Heck, they probably have a database that can be set to automatically send forms and reminders to those aupairs with arrival dates after XYZ date and reset the magic date for each year.
Interestingly, this is the first year I know of where our LCC actually suggested our au pair fill out the form and pay the tax. In past years, it’s been more of a just forget about it sort of attitude.
Here is what our LCC just sent:
Tomorrow (April 15) is Tax Day. This is the deadline for mailing in your
tax returns on time.
*May I e-file?* – No. It appears that the 1040NR EZ form cannot be
electronically filed.
*What if I am not ready by April 15 (tomorrow)?* – You should try to send
your taxes in by the deadline. But, if you don’t make it in time, you
should still send them as soon as you can.
*What if I don’t have enough money to pay the whole amount by April 15?* –
It would be best to pay as much as you can with your tax return and include
a note saying when you plan to pay the remainder. The longer you wait the
more late penalty you will have to pay.
Make the check or money payable to: United States Treasury
Be sure to write the following on your check:
Your social security number
Tax year (2009)
Tax form filed (1040NR-EZ)
Your daytime phone number
Mail your federal tax return to:
Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0215 USA
I agree, My 2 Cents. We get plenty of computer=generated renewal forms and other paperwork from the agency, so this would not be that hard for them to include in their database, especially considering the amount of fees we are paid (and as a family who has been with the program for four years, they don’t have a whole lot of work to do for us!) In our cluster, several APs are planning to go back and apply for student visas, and one discovered that she needed to pay back taxes in order to obtain this, so suddenly everyone is trying to figure out if they owe, and how much, as they’re planning to do the same. Our LCC doesn’t have information for them, naturally, and interestingly, we seem to be one of the only families who have done witholding and paid SS and other taxes on our au pair.
MommyMia — you shouldn’t be paying social security/FICA on your AP. One of the benefits of the program is that you can (legitimately) not pay those taxes. The IRS website is explicit about that. The only taxes that are due are the federal (and possibly state) income tax.
APC actually stepped up to the plate and sent us a handy FAQ paper that addresses taxes, including links to the appropriate files. They also sent a handy sheet with 2009 earnings, based on arrival date. I think it is total crap that agencies weasel out by saying, “we are not tax preparers, so we have no information for you.”
i am not happy with reading this, i was an au pair in the US for 2 years and didn´t pay, and now i would love to come back and wish i had, but nobody informed me about it and my LCC and my HF said that i wouldn´t have to.
it makes me mad that i didn´t get any information about it whatsoever from either the organisation nor the LCC nor anybody else.
now i am stuck with it and feel guilty and will eventually run into problems that i never intended to run into!!
i just wish somebody would have lost a word about it. or at least helped me with figuring it out, and not just denieing that i have to do it.
i have another question though, does anybody know what happens to the SSN when the au pair leaves, do they expire? can i still use mine when i return,? do i have to fill out a form that that SSN is not in the US anymore?
nobody knew about tahtone either and i don´t want to run into another bad surprise!!
your SSN doesn’t expire ,you can use it when you return.
Disappointment, you may want to check with the Social Security Administration, since the SSN you got while you were an au pair was based on your J-1 visa type (imprinted with “Not valid for work”). No doubt they’d keep the same number, but you should inform them if you have a different status, such as F-1, because you might be eligible for some type of work under a different visa.
disappointment, I just want to let you know that it is never too late to pay your taxes, you can still do it.
I don’t know the answer to your question about SSN though.
I appreciate all of the advise on this thread but the truth is , I still don’t
have a bottom line answer. The only thing I know for sure is that I have to consult my tax accountant. It seems to me that everyone has gotten different advise.
There is no conflict. If you are an Au pair in the US on a j1 visa, then you need to file taxes if you make more than 3650 in any year.
Why do you suppose the agencies do not just issue that information?
Why do so many agencies just not come forward with that info ?
And why, have there been so few problems to date ? No aupair of mine has ever had any problem.
I suspect that when the stipend was lower, fewer au pairs reached the threshhold where they woud owe taxes. I’ve been pleased with the comunications fom AuPairCare both last year and this year. This year, our LCC dedicated the March cluster mtg to taxes and filling out the forms. I don’t know what my au pair will do (I encouraged her to file and pay), but she certainly has the information now to make an informed choice.
anonymous,
the agenices I’ve been with, did clearly tell au pairs they have to file taxes, gave the correct tax form – and the rest of the advice is in the instructions to the form. So I suppose some agencies do give this information, or do it as of recently.
Why there have been so few problems? IRS has bigger fish to catch for sure, than a few hundred dollars owed by au pairs.
Thanks, Anna. I am sure you are right about the IRS and big fish but I like to do things correctly.
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