My apologies in advance to Torito for opening up a thread that he closed. However, I came to it late and would like to express a few opinions.
http://www.eccie.net/showthread.php?t=334643&page=2
One business of mine uses outsourced payroll. We fax them every Monday morning with hours worked plus any any additional pay (overtime, bonus, etc.). The service then pays the employees either on direct deposit or a debit card and drafts our bank account based on their percentage which includes all payroll taxes plus their fee.
If a provider decided to go this route then her earnings would be subject to all payroll taxes and she is in the clear. In addition, she is building up social security history and will be eligible to withdraw in latter years. (I can give you many examples of self-employed guys who don't pay in but are expecting social security to take care of them.)
As someone noted previous, Al Capone got taken down with income tax invasion. If a provider decides to declare (all or part) of their income as "legal" in respect to taxes then the history is there and they don't have to declare how the earnings were earned. Just ensure if the payroll company is reporting taxes then they are submitting the requisite dollars so you don't have a huge tax bill.
My .04 cents. Anyone who needs or wants more detail then feel free to PM me.
One more thought after the initial post - This is totally dependent upon the provider wanting to be semi-legit in the eyes of the IRS. If the provider wants to build legit history then it is easy to do but will cost her the taxes that the rest of us pay.
Followup to Sweet.Treats Thread
