>CPA says I owe federal taxes; payroll says they withheld everything correctly

It's possible for both of these things to be true.

Your employer only knows how much they are paying you. They don't know about the rest of 900 possible things that could change your tax bill such as capital gains, interest, rental income, etc.

ETA: I see you've added that you have no other sources of income. You can look at the IRS tax withholding tables yourself and compare what your employer is deducting to the tax tables. No need to pay an accountant to do that.

Not very many managed funds beat indexes over a long period of time especially when you consider expense ratios. In addition, actively managed funds tend to have larger capital gains distributions (meaning you get to pay your taxes annually instead of years or decades later).

Note that I didn't say there are none.

>Isn't it more on the worker as an independent contractor?

Only if they meet the IRS criteria for self-employment. OP has implied they don't (such as a regular nanny).

People get caught all the time.

When employees discover they can't rent an apartment or get a car loan because they have no documented income, they'll come to Reddit and ask what to do. People can be very helpful here...lol.

In addition to not having documented income, your employee won't be earning any social security credits (unless they are legit self-employed and pay the required taxes) and won't be able to contribute to an IRA (unless they have other earned income they pay tax on).

P.S. The employer share of social security and medicare tax is 7.65%, not 15.3%.