Do I owe nanny taxes for our summer nanny?

Summer will be here before you know it and that means that kids are out of school and ready for some relaxation and fun. If you continue to work full time during the summer, you must find reliable childcare for your kids during the duration of the summer. Finding a summer nanny could be something that you’ve never had to do before. It’s important to note that hiring a nanny for the summer is different than paying a babysitter for services occasionally. Hiring a summer nanny means you’re officially a household employer and with that, comes some rules that you’ll have to adhere to.

Paying your nanny “under the table” or “off record” may sound like it can save you money in the end, but it has the potential to cause costly repercussions should your nanny choose to file for unemployment benefits later. To avoid any hassle with the IRS or with your nanny, you’ll need to factor in the tax obligations that come with her employment. If you pay your nanny more than $2100 over the course of the summer, you’ll need to pay taxes. Under the law, your nanny is considered an employee and that means you cannot pay her off the books.

Unsure of how to withhold the proper amount of taxes from her paycheck each month? Enrolling in the HWS household payroll services that we offer can help ensure that you’re doing things right and there will be no hidden tax surprises later. We’ll get you registered with the IRS, get tax identifications ready, and check to make sure your nanny is getting paid accurately with the right amount of taxes withheld.

Plan ahead of time and pay the nanny transparently from the first day that she begins working for your family. This means you’ll avoid paying costly and  unexpected penalties later.