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I'm a travel nanny. How do I pay Income Taxes?

Posted by HomeWork Solutions on Mar 27, 2018 3:50:00 PM
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I'm a travel nanny. How do I pay Income Taxes?

Travel nannies and newborn care specialists typically work in multiple states - and even countries - in the course of a year. A travel nanny is engaged by a family to provide childcare when the family is traveling to resorts, on a cruise, or just out of town a week or more on business. When it comes time to file and pay income taxes, multiple questions arise.

In general you pay state income taxes where you live. You do so by filing a resident income tax return and declaring all of your income earned, regardless of where it was earned. However many states, most particularly New York  require that you file and pay income taxes on the income you earned in that state also. The rules vary by state and can be conditioned on the number of days you worked in the state, or by the amount of money you earned while working in the state. If you are not sure your best bet is to contact the state's Department of Revenue -  TurboTax has this wonderful page to make that easy! This page published by the Mobile Workforce Coalition has an excellent map and cheat sheet about various state rules. 

Get out of Jail FreeIf your temporary work is in Alaska, Florida, Nevada, South Dakota, Texas, Washington, or Wyoming you get a "Get Out of Jail" free card - as these states do not collect income taxes! Simply report that income in your home state. 

You pay taxes to another state by filing a nonresident return in the other state(s) where you earned income. A nonresident return only taxes you on the money you earned in that state.

This sounds like you are then double taxed for your income - by your home state and the work state, right? Not to worry, on your home state resident income tax return you are entitled to claim a credit for the income taxes your paid in the other states.

Clearly you will find it easiest to comply if you keep excellent records!

So what about the income you earn working in a foreign country?  Say you spend the summer nannying for a family in Italy. What do you do then? This is where the advice of a competent income tax specialist comes into play. In general, US citizens and resident aliens are subject to federal income tax on worldwide income.  However, many countries tax non-residents on the income they earn in their country (just like some states do). This can become much more complicated, and you are not going to get by with DIY tax software!

Disclaimer: ANY questions specific to your income taxes must be directed to a qualified accounting professional. The team at HomeWork Solutions specializes in household payroll taxes only! This is a general explanation, and not specific tax or legal advice.


Topics: nanny, agency

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