Employing Domestic Workers and Navigating Tax Laws: An Empirical Perspective

• In Event: Contemporary Legal Issues in Taxation

Abstract

In our ongoing field study, we conduct interviews with household employers of domestic workers—whether nannies, caregivers for the elderly, or housekeepers—to understand their experiences and perspectives on compliance. We use a combination of anonymous surveys and long-form interviews to document employers’ self-reported behaviors and usage of tax documents—Schedule H filing as well as 1099 and W-2 issuance. We investigate the extent to which employers justify tax form usage (or lack thereof) based on knowledge of tax law and desire for legal compliance. We also investigate the extent to which workers’ interests within and outside the tax code—including the Child Tax Credit, EITC, immigration status adjustments, and benefits eligibility thresholds—factor into employers’ decisions.

We focus on testing four hypotheses. First, we test whether domestic worker employers’ tax compliance correlates with i) professional status as lawyers or tax professionals and ii) higher socioeconomic status. Second, we test whether employers justify tax compliance through personal concerns (employer legal compliance) rather than through worker concerns (worker benefits and tax credits). Third, we test whether employers, in their tax compliance decisions, incorporate peer recommendations and experiences over their own domestic employees’ experiences and preferences. Fourth and finally, we test whether employers who report perceptions of tax complexity are less likely to file tax documents.

Authors

• Shayak Sarkar, University of California-Davis

• Ariel Jurow Kleiman, USC Gould School of Law

• Emily Satterthwaite, Georgetown University Law Center