Unless you’re a tax expert, you likely have some questions about what your responsibility is when it comes to paying taxes on your household employee. If you have a nanny and you have paid this person $2,000 or more in wages, you’re officially considered a household employer and you’re required to pay Medicare and Social Security taxes. You will also need to report your nanny’s income and taxes that are paid for the year, as well as pay Federal employment taxes with your federal income tax return. Most states require filings every quarter and the state and federal thresholds are often different, based on quarterly or annual wages. Although you file a schedule H annually, be aware you may be required to pay quarterly estimated tax payments.
You’ve found a nanny to care for your children and now comes the conversation of payment and taxes. If your nanny doesn’t want you to report her wages or pay taxes, how should you respond? It may be convenient to pay your nanny under the table, but not only is this illegal, it could be very costly if you end up getting caught. Failure to pay nanny taxes could result in hefty penalties and fines, often in the thousands of dollars range.
We’ve seen it shatter the dreams of potential officeholders, time and time again — no, it’s not adultery, bribery, or breaking into the Democratic National Headquarters — we’re talking about the nanny tax.
Having a child is a big commitment – it takes time, patience, and money, but the rewards of being a parent are unlike anything else in life. For many parents, the change in lifestyle that comes with parenting means that you need some extra hands.
Many families find this both complicated and time consuming. Prefering to dedicate this time to their family, they outsource the nanny payroll to a specialty nanny payroll service like HomeWork Solutions.
If you’re determined to figure out how to pay the nanny taxes yourself, here are the steps on how to pay your nanny legally.
Topics: nanny tax
Millennials, as a whole, are starting to have children, and since raising a child can be expensive, many Millennials choose to work and use childcare services for help. If you’re a Millennial and you’re interested in learning more about childcare services, then check out some of our thoughts below.