How Your W-4 Could Be Causing a Tax Bill (And How to Fix It!)

Tax season can be stressful, especially if you end up owing more than expected. Many nannies and other household employees find themselves with a surprise tax bill, often because of how income tax withholding is handled throughout the year.

If you’ve ever wondered why you owe taxes when you file, you’re not alone. Below, we break down the top three reasons household employees end up with a tax balance due—and how to avoid it in the future.

Not Considering the Two Jobs Box 2(c) on the W-4 When Working a Nanny Share or Multiple Jobs

If you’re part of a nanny share or work multiple household jobs, the way you fill out your Form W-4 (Employee’s Withholding Certificate) matters. Many household employees miss checking Box 2(c) in Step 2, which is meant for people with multiple jobs.

Why does this matter? Each employer withholds based on your wages from them alone. But if you have two or more employers, your total income is higher, and you may fall into a higher tax bracket. Not adjusting for multiple jobs could result in too little being withheld, leading to a tax bill at filing time.

How to fix it:

• When filling out your W-4, check Box 2(c) in Step 2 if you have multiple jobs.
• Use the IRS Tax Withholding Estimator to ensure the correct amount is being withheld.
• Update your W-4 anytime your job situation changes.

Your Employer Did Not Withhold Income Taxes

Unlike Social Security and Medicare taxes, income tax withholding is optional for household employers. If your employer didn’t withhold federal and state income taxes from your paycheck, you might be responsible for paying those taxes when you file.

This often happens when:

• The employer only withholds Social Security and Medicare taxes (which are required).
• The employee opts out of income tax withholding to receive a larger paycheck.

How to fix it:

• Ask your employer if they can withhold income taxes from your paycheck.
• If they decline, consider making estimated tax payments each quarter to the IRS to avoid a surprise tax bill.
• Set aside a portion of each paycheck for taxes if withholding isn’t an option.

Filing as Married but Being the Higher Earner Without Adjusting for Multiple Jobs

Household employees who are married and the higher earner in the household may need to adjust their W-4 form. If this applies to you and you don’t use the Multiple Jobs Worksheet on the W-4, your employer might withhold too little from your paycheck.

This is common when:

• One spouse earns significantly more than the other.
• The lower-earning spouse’s withholding is based on a lower tax bracket, which doesn’t account for the higher-earning spouse’s income.

How to fix it:

• Use the Multiple Jobs Worksheet in the W-4 instructions to ensure correct withholding.
• Check the IRS Tax Withholding Estimator for a more accurate withholding amount.
• Adjust your W-4 with your employer if necessary.

Bottom Line: Small Adjustments Can Prevent a Tax Surprise

Owing taxes at the end of the year is frustrating, but it’s usually preventable. By properly filling out your W-4 form, ensuring income tax is withheld, and making adjustments if you have multiple jobs or a spouse earning income, you can avoid unexpected tax bills.

Need help with household payroll taxes? HomeWork Solutions makes it easy for families to stay compliant and ensures you get paid correctly. Encourage your employer to reach out—we’re here to help!