Don’t even think about making that hush-hush cash payment to your child’s nanny.

On average, families in the U.S. pay child care workers $556 each week — nearly $29,000 a year, according to More than half of families report spending at least 10 percent of their household income on child care.

Though it’s easy to agree on a payment schedule with your nanny and hand him or her the cash, you’re risking a reprisal from the Internal Revenue Service. In extreme cases, you face the possibility of prison time.

Over the last 10 years, the IRS has received fewer returns showing employment taxes withheld for child care providers, cooks and other home workers.

Taxpayers must submit Schedule H if they paid at least $2,000 in wages annually to a household employee and withheld payroll taxes, including Social Security and Medicare levies, as well as federal income taxes. You’re also required to turn in this form if you paid wages of at least $1,000 in any quarter to all household employees.

You’ll also need to send this worker a W-2 with earnings, tax and withholding details, and you’ll have to send a W-3 to the Social Security Administration.

The deadline to send workers a W-2 for the 2016 tax year was Jan. 31.

Since willful failure to pay employment taxes can be punishable with time behind bars, it’s imperative that you knock out the appropriate paperwork before you hire a household employee.

Get on the same page with your household worker in the interview process: Tell the prospective hire that the income will be reported to the IRS.

“Nannies are accustomed to being paid under the table,” said Susan Allen, senior manager for tax practice and ethics at the American Institute of Certified Public Accountants. “Explain that ‘This costs me more each year because I’m paying your extra share of Social Security taxes.'”

Expect those responsibilities to inflate your costs by up to 15 percent, versus paying your nanny off the books, Allen said.

You’ll also need to register with your state as an employer, said Steffen.

Here’s what you need to get right with your employee and the IRS:

  • Form I-9: This is used for verifying the identity and employment authorization of your worker. Your employee will need to provide documentation to prove their identity.
  • Form W-4: A withholding allowance certificate that you’ll need from your employee if you withhold federal income taxes.
  • Schedule H: You’ll turn in this form with your 1040 when you file your taxes. This will spell out how much you paid your employee(s) and the applicable unemployment, Social Security and Medicare taxes paid.

Don’t go it alone. You can hire an accountant to ensure you’re operating on the right side of the law.

Some payroll software providers also offer a home employee option that will allow you to withhold taxes and pay your nanny via direct deposit. Providers include HomePay and NannyPay.

“You’re managing a person,” said Allen. “This has its rewards and challenges.”