gb0248
Level 2
‎05-12-2021 11:52 AM
I have a client that bought a large property and decided to bring on a live-in
nanny for their three kids since daycare would cost $75,000.
 
The property has multiple buildings including an old carriage house that
they renovated and plan to let the nanny live in as part of compensation.
 
I’m assuming I should be grossing up compensation on the W-2 for reasonable
rent and utilities as a manual check component or employer loan.  I assume
it is a benefit subject to FICA and Medicare, and I’m sure state and local
want pound of flesh too.
 
I will assume I run rental of the building on Schedule E.  I’d assume it
may be a net-net lease only allowing depreciation since it is not truly
income generating.  They exceed $150K so derive no benefit but if paying
household employee tax on the adjustments compensation shouldn’t cause
reason to declare as income.  That just feels like double taxation and does
not feel right.
 
If anyone has thoughts or experienced such a goofy animal I’d love to hear
your thoughts.  I just hope they don’t decide to hire a priest to be the
nanny...
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