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IRS Warning: Check Your Withholding Status

Posted by HomeWork Solutions on 7/13/09 1:56 PM
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Nannies who are married, in a nanny share, or have more than one job take note:

NannyTax_Time.pngThe Internal Revenue Service is reminding individual taxpayers to check their 2009 federal income tax withholding levels to ensure there are no surprises when filing returns next spring. Because the Making Work Pay credit lowered tax withholding rates this year for 120 million American households, taxpayers should ensure that enough tax is withheld if they are among these groups: multiple job holders, families with both spouses working, workers who can be claimed as dependents by other taxpayers, and pensioners. Failure to adjust withholding could result in taxes owed or smaller refunds, IRS said.

If a nanny is married and both spouses work and both spouses had their withholding tax adjusted, they are being credited for 150% of the available credit - and may be surprised to owe several hundred dollars at the end of the year. If you work two or more jobs and have withholding from each, you may be being under-withheld because each job treats your withholding tax calculation as if you are working only for them. Nannies in a nanny share have to be particularly vigilant that both jobs are taking into account your TOTAL income, not just the portion they pay individually, when calculating your withholding.

Remember, withholding tax calculations are simply estimates. You true tax calculations depend on many factors other than your income and marital status.

The IRS withholding calculator at IRS.gov and Publication 919, How Do I Adjust My Withholding?, can help a taxpayer compute the proper tax withholding.

Topics: nanny income tax

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