When Do I Owe Nanny Taxes?

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 $2,100 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.

If you have recently hired a nanny and you’re not sure where to start when it comes to reporting nanny taxes, it’s common to feel overwhelmed. Nanny taxes can get very complicated and there are a variety of labor and tax laws that need to be upheld. If you think you can skip those and pay your employee under the table, think again. This could end up being a very costly mistake. Misfiling or not filing at all could end up costing you hundreds or even thousands of dollars.

What are the benefits of paying the taxes?

Well, first off, you won’t risk getting fined if the IRS finds out that you’ve been paying your employee under the table. Not only that, but your nanny will benefit by getting the social security and Medicare services she needs when she decides to retire. In addition, when the job ends she will be able to claim unemployment benefits to take care of herself and her family until she finds more work.

How we can help

Your nanny is considered a household employee and needs to be paid as such. If you’re unsure of how it all works, we can help.

• We will calculate the paycheck deductions, bonuses, benefits, and taxes with each paycheck
• We’ll save you time and file all required paperwork
• You’ll have peace of mind knowing that our team of experienced payroll professionals are taking care of all the details so you don’t have to

Don’t take on the job of nanny tax preparation unless you understand it completely and can do it with total accuracy. Mistakes can come with high costs or penalties, so it’s best to plan ahead and work with a household payroll expert from the very start.