A Taxing Situation in Canada
I began working for my current family in 2009, when I started working for this family and we discussed pay and taxes I stated that I wanted to make $15.00 per hour which in the nanny-world I was assuming is take home or net pay. When the first tax season came around, I asked them about taxes and they replied "don't worry about it". That being stated I still claimed a partial portion of my pay to avoid issues. They then claimed this same portion and that was that. One of the employer's did mention that in our contract it was stated that I would pay my own taxes, I simply ignored this comment and went with the "don't worry about it" from the male employer. I ended up paying out just over $1000.00 The following year, I told them I would be claiming X-amount, and then they also claimed X-amount and it was fine. Nothing else about it was brought up. I claimed about half of my income and paid on that portion. I ended up paying out around $2,500.
This tax season came around, and since nothing was talked about prior, I assumed we would carry on the same deal that we have been doing this whole time when I pay on a portion that I can afford. However, when I told my boss the number that I had selected he seemed upset but did not say anything further about it. I ended up claiming a larger portion and I paid out around $3220.00. My employer stated to me, that starting right away, I would need to claim the actual number I make for the next tax season. Claiming the real number would result in me paying out $7,000 in taxes at the end of the year! This "change of plans" will alter my current take-home income from $2835.00 a month to $2235.00 a month. This means that on an hourly basis I will make $12.69/hr compared to my prior $16.10/hr. Which for me is a huge hike! On top of that they want me to claim my own taxes which means that I would have to save [on my own] the amount owing at the end of the year, rather than have my employer dock it from every pay check. In my opinion this means that my employer is getting away with a lot as they aren't having to pay on my portion at all as they are considering me a self-employed person.
I am not really sure how to approach this situation, on one hand I feel that I should "let it go" and pay taxes for the year as requested as I have got off without doing so proper for two years prior and thus saved money. Also the child will be starting school in the Fall (half-days) and I do not think that my employer will be altering pay thus, I will be getting paid three hours per day to essentially stay home. (I think that this is true as currently the child does go to a preschool where we have this arrangement currently and will just keep it when JK starts). My daily responsibilities are to care for the child, clean the child's area of the house, child laundry, cooking, grocery, errands, party plan, etc. I do it all. Also, I work for a single father which often results in myself getting overwhelmed with his messes and cleaning his clothes, and messes around the house as well at no extra pay. I have been doing this for three years so its kind of a self-assumed duty, as otherwise I cannot work such unclean conditions.
Please note: - Contract renegotiations are coming August 31st, 2012. - I reside in Canada, and thus U.S nanny-tax laws do not apply to me. - I have ten years experience, and three years with this particular family. - Over the past year I have been through a lot of issues with the child's non-custodial parent which has caused a lot of stress and even court related incidents. - I take care of one child - My employer provides me with a car for work and personal use (I take it home), the gas for the car (work week only), the insurance, and all car repairs, and toll charges. - I have a great relationship with the family. - I am planning on leaving this family September 2013 to go back to school full time.
My questions are: 1. Do you think that I should "suck it up" and just take the hit in pay for one year? 2. Do you think that I should ask for a net pay of $15.00/hr going forward in my new contract? 3. If you were my employer would you be upset at my new request, and look for a cheaper nanny with less needs? Any other advice would be much appreciated, however, please do not reply with "you should be paying taxes, or serves you right etc" I am looking for advice, not judgments. Thanks, From: Northern Nanny.
Please be respectful of OP's request for non-judgmental opinions. Thank you!
at 1:33 AM