I employ my mother as a babysitter and every year I give her a W-2 but I haven't been withholding or paying any taxes. That's her only source of income and she makes around $5,000/year from that. Recently I had to cut her hours since I'm now working from home due to the coronavirus situation. She's thinking about applying for unemployment and I'm wondering a) if she's eligible? and b) if that'd get me into any trouble? From the research I've done I don't think I owe any taxes, but I'm not sure if the Michigan Unemployment Insurance Agency would see it that way.

I employ my mother as a babysitter and every year I give her a W-2 but I haven't been withholding or paying any taxes. That's her only source of income and she makes around $5,000/year from that. Recently I had to cut her hours since I'm now working from home due to the coronavirus situation. She's thinking about applying for unemployment and I'm wondering a) if she's eligible? and =======>>>it depends: I mean Even if your babysitter is your mother, she is responsible for reporting this income to the IRS if certain income thresholds are met; Generally, household employees earning $1.8K or more during a tax year must be put on payroll. You, as an employer, are required to file W-2 forms for their employees, along with the annual Form W-3 summary report, but avoid filing quarterly forms. Your state might have a similar system. Or they may require you to file all the quarterly reports. so please contact your home state dept of revenue for more info in detail

in general, even a nanny who accepted a cash wage nanny job, off the books, can still file for unemployment benefits. In your situation, the former employer , you, becomes responsible for the filing and payment of all Social Security and Medicare, Federal and State unemployment taxes. This includes the employee portion of Social Security and Medicare! This is the most common way a family skipping the "nanny tax" gets caught. As you can see, if you don?t report your household employee?s , a nanny, wages and don?t pay the associated taxes and you are audited, you will be subject to penalties and interest. Both the nanny and you face penalties if caught not paying the nanny taxes.


b) if that'd get me into any trouble? ======>>>as mentioned above; the IRS and your state calculate penalties for late filings and late payments. Your home state has a different schedule for penalties and interest. Clearly, filing nanny taxes late can be very expensive.
From the research I've done I don't think I owe any taxes, but I'm not sure if the Michigan Unemployment Insurance Agency would see it that way.=====>>as mentioned above; Nannies are eligible for unemployment benefits when they're let go for any reason other than ?for cause..however, most states have joint enforcement agreements with the IRS, as soon as that claim is filed and no record of unemployment tax accounts are found, the IRS and possibly the state department of revenue are automatically notified so they can take their own enforcement actions. Your mother could get hurt on the job or file for unemployment benefits . please contact. Your home state un benefit agency for more info.