How Nanny Payroll Taxes Are Paid
How Nanny Payroll Taxes Are Paid
Frequently Asked Questions
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How are the nanny's (employee's) payroll taxes paid?
Most household employers have BOTH Federal and State tax reporting and filing obligations.
Federal Employment Taxes
The Federal employment taxes include Social Security tax, Medicare tax, withheld Federal Income Tax (if applicable), and the Federal Unemployment Tax (FUTA).
The household employer is required to collect the employee's (nanny, housekeeper, etc.) contribution to Social Security and Medicare taxes. Should you fail to collect, you remain responsible to remit these taxes for the employee. The Internal Revenue Service (IRS) collects the nanny payroll taxes. They are summarized annually on the family (employer's) Form 1040 Schedule H - an attachment to the family's personal federal income tax return.
The nanny payroll taxes are added to the family's personal income tax liability. Most families with full time staff will make quarterly payments of the nanny payroll taxes using 1040ES estimated tax payment coupons. This protects the family from substantial underpayment penalties at year end should the total family income tax + nanny payroll tax liability be too large.
Deducting federal income taxes and most state income taxes is optional. When income taxes are not withheld by the employer (family), then the employee (nanny, housekeeper, maid) is required to make periodic payments of any amounts due.
Most household employers with a full time staff member offer to deduct income taxes for the employee from his/her payroll. This is a convenience to the nanny or other household staff, relieving them from the need to make quarterly estimated tax payments on their own. Families with occasional or part time staff, such as a weekly housekeeper, in general do not deduct income taxes from the employee's payroll.
State Employment Taxes
Separately, the nanny employer is typically required to register for and make quarterly payments of state unemployment taxes. These unemployment taxes are paid to the state where the work is physically performed. Many states are moving to require online payroll reporting and unemployment tax payments.
Calculate Nanny Payroll Taxes
Nanny Tax Compliance: Why a Nanny Wants to be Paid Legally
For More Information contact HomeWork Solutions, Inc.
at 1-800-NaniTax or e-mail and submit a question.
