The Payroll Blog

News, tips, and advice for small business owners

I Have a Nanny: What Taxes Do I Need to Pay?

Posted On
9/7/2016
By
SurePayroll

Hiring a nanny will impact your life in many ways, including your finances. In addition to the salary you pay your nanny, you are expected to pay a combination of taxes. Neglecting to do so could lead to trouble with the IRS, including large penalties.

i have a nanny what taxes do I pay - nanny taking care of a baby and puppy

Commonly referred to as the "nanny tax" this is nothing more than the taxes you are required to withhold from your employee, as well as the taxes you are expected to pay as a household employer.

What is FICA?

Do you expect to pay your nanny more than $2,100 in 2018? If so, you should begin to withhold his or her share of Social Security and Medicare taxes.

This sounds complicated, but it is actually quite simple. You will withhold a total of 7.65% from each payment. This includes 6.2% for Social Security tax and 1.45% for Medicare tax.

Note: you must stop withhold Social Security tax after your nanny's wages for the year reach $117,000.

The above is an explanation of what you employee pays. As an employer, you will pay the other 7.65% of FICA. You may also have to pay state and local taxes.

What about Federal Income Tax Withholding?

According to the IRS, "you are not required to withhold federal income tax from wages you pay a household employee."

You should only do this if your employee requests and you comply. In this case, you must have your nanny complete Form W-4, Employee's Withholding Allowance Certificate.

What You Need to Pay Nanny Taxes

If you are required to pay nanny taxes, you need the following:

  • State and federal tax identification numbers.
  • Payroll information.
  • Forms, such as a completed W-2.
  • Quarterly filings for federal and state returns.

Final Word

You know you need to pay nanny taxes, but are still confused as to how and when to remit payment. To avoid confusion and guarantee accuracy, consider hiring a payroll company with experience assisting household employers.

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This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs.