Plenty of us worry about making mistakes on our taxes.
And when high-profile taxpayers stumble so publicly, as President Barack Obama's nominees have recently, it often makes the rest of us think back to past tax returns and whether we did everything right.
Granted, taxes are confusing. But you never want to be on the wrong side of the IRS. Because as we have seen, it eventually can catch up to you.
So, just in case the Obama administration throws your hat in the ring, here's how to avoid some mistakes of past nominees:
Nanny taxes: These are the payroll and unemployment taxes employers must pay once their domestic employees' income reaches a certain level. Despite the name, nanny taxes apply to all sorts of workers, such as drivers, maids, private nurses, housekeepers, health aides and yard workers.
Many of us initially heard of nanny taxes when President Clinton's first nominee for attorney general bowed out after the revelation that she didn't pay taxes for her nanny and driver, both undocumented workers.
Political appointees continue to slip up over nanny taxes. Nancy Killefer, who dropped out last week as Obama's nominee for chief performance officer, had a tax lien on her house a few years ago for failure to pay unemployment taxes for a housekeeper. She has paid the tax and penalties.
Paying nanny taxes protects low-income workers who don't have the extra dollars to set aside for retirement or the loss of a job. Even so, many employers ignore the tax.
"People are on a budget, and nanny taxes cost real dollars," says Arthur Ellis, president of the Nanny Tax Co. in Chicago, which handles nanny taxes for employers. Others figure they won't get caught.
And household workers often play along.
"If they are making $12 an hour and just getting by, who has room for taxes?" Ellis says. "So they are very willing to be part of the underground economy."
When a worker is an employee: Taxes can only become an issue if you are an employer. It's often hard for people to understand when those helping in and around your house become employees, says Susan Huddy, vice president of Gaithersburg accounting firm Costello & Huddy Chartered.
The key is how much control you have over what work is done, along with how and when, she says. If you exert all the control, you're an employer. Say you hire a person to regularly clean your house, giving specific instructions on how to do so and providing the cleaning supplies, Huddy says. In that case, you're an employer.
