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I have a live-in nanny who happens to be my sister. My wife and I have paid her biweekly for over a year, but only during this recent tax season did it dawn on us that there is more to do legally. I put together a W2 and listed my own social in box a - I think both EIN and SSN are allowable.

Now I have filed an LLC (with EIN) but I think it will take a month to process. When that LLC+EIN comes back, will I be able to state that my sister has been an employee of the EIN since the start of the year? If not, how should I file her prior work for tax purposes?

My sister and I share a Virginia residence and the LLC is also a VA LLC.

EDIT: To be clear, I have filed an LLC with myself and my wife as co-owners and plan to make my sister an employee. She does not have a nanny business.

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    I'm confused. Has your sister set up an LLC for her nanny business, or have you set up an LLC that you own and want to make your sister an employee of your LLC? If it is your LLC, do you have some sort of business associated with it? – Ben Miller - Remember Monica May 3 at 15:42
  • Have you read IRS Publication 926 yet? – Ben Miller - Remember Monica May 3 at 15:49
  • Edited to clarify that the LLC is mine and I intend to make my sister an employee. I've read the publication but I don't see how it answers my retroactive hiring question. I plan to use the business for real estate management (my wife and I do this) and have nannycare as a benefit. – John Vandivier May 3 at 17:11
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    Is the purpose to try to save some tax money by deducting the cost of the nanny as business expenses? Have you read IRS Publication 15-B yet? Have you asked your accountant about it yet? – Ben Miller - Remember Monica May 3 at 18:00
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    What is the motivation for wanting to do this? There may be more to consider than simply what you are asking in the question, or there may be a better approach. – TTT May 3 at 18:25
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I was able to file for an EIN today. I'm not a lawyer or financial advisor, but the answer appears to be "If an employer-employee relationship existed prior to obtaining an EIN, the employer can retroactively apply the EIN after it is applied."

My answer is based on the following:

This is called the employment start date. It is a field that exists in the EIN application. You are allowed to enter a date prior to today's date in that field.

With respect to my particular situation, here's what I did:

  1. File taxes for 2019 by issuing a W2 with my SSN in the employer field.
  2. Obtain an EIN as a household employer and backdate my sister's start date to Jan 1, 2020. This is not the LLC EIN but an EIN for me personally.
  3. File the LLC with EIN. Whenever that is ready, my sister will legally have a change in employer from my personal household EIN to the LLC.
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