2009 Nanny Tax Roundup

Several items that we blogged about previously on the Nanny Tax blog will generate questions as the end of year and income tax filing season approaches. Here is a quick re-cap:

1. Married or 2-Income Nannies will find that the "Making Work Pay" tax credit may have caused under-withholding through out the year on Federal Income taxes, and an unexpected several hundred additional dollars in taxes due.

2. G-5 Domestics who arrived in the United States after July 1, 2009 are ineligible for the "Making Work Pay" tax credit and they too may find they owe additional Federal income taxes when filing their returns in the spring.

3. Federal income tax withholding rates will increase in 2010. This is due to the Making Work Pay tax credit being spread over 12 months in 2010, vs. 9 months in 2009. Make sure you recalculate your paycheck withholding in January - there are numerous adjustments at the state level also.