Don't forget about the Form W-9! Requiring a completed W-9 adds an extra layer of verification. If someone provides false information on a W-9, they're committing perjury under federal law, which creates a strong disincentive for scammers.

One approach that's worked well for our platform is implementing a tiered verification system. For lower-risk transactions (under $500), we rely on document verification plus state business registry checks. For higher amounts, we add banking verification and sometimes require a video call with the business owner. We use a combination of automated document analysis (similar to what others mentioned with AI tools) and manual spot-checks. The key is having clear escalation procedures - if anything looks suspicious during automated screening, it gets flagged for human review. Also worth considering: many fraudsters will abandon applications if the verification process seems thorough, even if they could potentially pass each individual check. Sometimes the perception of rigorous verification is as valuable as the actual verification itself. For the volume you're dealing with, I'd recommend starting with document + state registry verification, then adding layers based on transaction risk levels rather than trying to verify everything to the same standard.

As a fellow nanny who went through this exact confusion, I want to emphasize something really important that got buried in all the discussion about tools and classification: **start keeping detailed records NOW** regardless of how your taxes end up being filed. Track your mileage when driving kids to activities, save receipts for any supplies you buy, and document your CPR certification costs. Even if you can't deduct these as a W-2 employee, having this documentation serves multiple purposes: 1. You can present organized expense reports to your family and ask for reimbursements (which aren't taxable income to you) 2. If there's ever a question about your work classification, detailed records help prove the business nature of your expenses 3. Some states do still allow certain deductions that federal doesn't The key conversation to have with your family is setting up a proper reimbursement system. Most families are happy to reimburse legitimate work expenses - they just need you to present it professionally with receipts and clear explanations of how each expense relates to your job duties. Don't let the tax classification confusion prevent you from getting fairly compensated for legitimate work expenses!

As a tax professional who works with many household employees, I want to add some clarity to this discussion. The original poster's situation is very common, and there are some key points that will help: First, determine your correct classification. Most nannies working regularly for one family should be W-2 employees, not 1099 contractors. The IRS looks at factors like who controls your work schedule, provides equipment, and directs how you perform your duties. If you're correctly classified as a W-2 employee, you cannot deduct business expenses on your federal return since 2018. However, you absolutely should discuss expense reimbursements with your family. Items like: - Mileage when driving kids (current rate is 67¢/mile for 2024) - Craft supplies and materials for activities - Required certifications like CPR - Any special equipment or clothing needed for the job These reimbursements aren't taxable income to you when properly documented. Create a simple reimbursement request system - track expenses with receipts and submit monthly. If your family isn't providing proper tax documents (W-2) and paying employment taxes, this creates problems for both parties. They're legally required to do this if they pay you over $2,400 per year. You miss out on Social Security credits and proper employment history. Keep detailed records regardless of classification - it protects you and shows professionalism to your employer family.

OMG this EXACT thing happened to me!!! 😤 The IRS verification system is SO broken this year! I'm seeing this issue EVERYWHERE in tax groups. Here's what works: IGNORE the message disappearing and verify anyway! The verification requirement is still in their system even if it's not showing up. I was freaking out when this happened but verified with my control number anyway and got my refund 11 days later! Don't wait for the message to reappear because it probably won't. Trust me on this one! 💯

I can relate to this frustration - it's like the IRS is playing hide and seek with important notices! Based on what others have shared here, it seems the verification requirement is still active even when the message disappears from your account. Since you have the physical letter with the control number, I'd recommend proceeding with verification rather than waiting. You can go directly to idverify.irs.gov or call 800-830-5084 to complete the process. It's better to verify and potentially do it unnecessarily than to let your refund get held up for months. The consensus from everyone's experiences here seems to be that the system glitch is cosmetic - the verification hold is still there behind the scenes.

Does anyone know if using TurboTax or H&R Block online helps with this situation? I moved states too and still have my old license.

I was in a similar situation last year when I moved from Texas to Colorado and was worried about the same thing! Here's what I learned: for federal taxes, your driver's license number isn't even required - the IRS only cares about your SSN. For state taxes, most states have workarounds for people who haven't updated their licenses yet. However, I'd strongly recommend getting your new state license ASAP regardless of taxes. I got pulled over for a minor traffic violation about 8 months after moving and the officer was not happy that I hadn't updated my license within the required 30-day window. Ended up with an additional fine on top of the original ticket. The tax filing worked out fine with my old license, but the DMV compliance issue was definitely a headache I could have avoided!

This discussion has been incredibly enlightening! I'm actually dealing with a very similar situation - my aunt provided me with a private mortgage when I bought my condo last year, and we've both been confused about the tax implications. Reading through all these experiences, I feel much more confident about how to handle this. The key points I'm taking away are: 1. My aunt doesn't need to provide me with a 1098 form since she's not in the mortgage business 2. I can still claim the mortgage interest deduction with proper documentation 3. She needs to report the interest income on her Schedule B 4. We should both maintain detailed records and consider creating a substitute year-end statement I'm particularly grateful for Grace's professional insights about the imputed interest rules - that's something I hadn't even considered. Our interest rate is fairly close to market rates, so hopefully that won't be an issue, but it's good to know about. One question I have for the group: has anyone dealt with making extra principal payments on a private mortgage? I'm trying to pay down the balance faster, but I want to make sure I'm properly tracking what portion of my payments goes to interest versus principal for tax purposes. Should I be asking my aunt to provide me with an amortization schedule, or is there a simpler way to track this? Thanks to everyone who shared their experiences - this community is incredibly helpful for navigating these complex situations!

This has been such a comprehensive discussion! As someone who just went through this exact situation with my grandmother's private mortgage, I wanted to add one more perspective that might be helpful. We encountered an interesting wrinkle that I haven't seen mentioned yet - the state tax implications. While everyone's been focused on federal tax requirements (which is absolutely the main concern), some states have their own reporting requirements or treat private mortgages differently for state income tax purposes. In our case, my state follows federal rules pretty closely, but I discovered that my grandmother's state (she lives in a different state) had some additional documentation requirements for reporting the interest income. Nothing major, but it required a specific form that we almost missed. I'd recommend anyone in a private mortgage situation check both federal AND state requirements, especially if the lender and borrower live in different states. Most states follow federal guidelines, but there can be small variations that are worth knowing about. Also, echoing what others have said about record-keeping - we created a shared Google Sheet that both of us can access with all payment details, running balances, and interest calculations. This has been incredibly helpful for staying on the same page throughout the year rather than scrambling to piece everything together at tax time. The peace of mind from having everything properly documented and both parties understanding their obligations has been worth the extra effort!