BOSTON (CBS) – When you employ someone to work in your home such as a nanny or a housekeeper, you are required to pay Social Security and Medicare taxes on their wages. What I call the Mary Poppins Tax.

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If you hired the worker and pay them directly, you are liable for the taxes. If you pay the company that employs them and sends them to your home to maintain your garden or clean your house the company is responsible for the taxes.

If you pay a household worker $2,000 or more in cash wages during the year, you are required to deduct Social Security and Medicare taxes and report the wages on an annual basis. Failing to do this in a timely manner may mean that you’ll have to pay a penalty in addition to overdue taxes.

Earnings for household help under age 18 are exempt from Social Security taxes unless the household employment is the worker’s primary occupation. If the kid next door works for you all summer baby-sitting and working in your garden, there are no taxes due.

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You will be required to keep a record of your employees: names, addresses, Social Security numbers, and the amount of wages paid. You are required to withhold from their wages their share of Social Security and Medicare taxes and you are required to match those withholdings.

The IRS has made it easy to file your report because it is filed with your income tax return (1040), and you pay the taxes with your return. You must also give your household employee the IRS form W-2 by January 31 after the year in which the wages were paid. And a copy needs to be sent to the Social Security Administration by the end of February.

I know it appears to be a nuisance but if you don’t pay these taxes, it could come home to haunt you in the future. Someone angry with you could report you to the IRS. Or worse, you decide to run for public office and the media does some snooping and find you never withheld those taxes.

I know it’s so easy to get caught up in the underground job market and pay cash. But don’t do it. If you don’t withhold Social Security taxes for your workers they may never be eligible for Social Security benefits.

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One more thing: Contact the IRS for the forms you need at 1-800-829-3676 or check out their website and get publication 926, Household Employer’s Tax Guide for more help as well as publication 10021 from the Social Security Administration.