![]() ![]() It’s important to keep accurate records of all wages and federal and state taxes you pay or withhold on behalf of your employee. Once it’s filled out, employers must simply hang on to the form. citizens provide information backing up their legal employment status and that the employer examine the information against a list of acceptable identification documents. #NANNYPAY WINDOWS 10 VERIFICATION#So the IRS requires that employers and their hires complete an employment eligibility verification form, dubbed I-9, before the end of the employee’s first day of work. The government doesn’t look favorably upon employers who hire people who can’t legally work in the U.S. In that case, withholding payroll taxes along the way makes more sense.Įxperts suggest that household employers begin withholding payroll taxes as soon as it seems likely that they’ll be increasing their employees’ hours, and wages, dramatically.Įven if you choose to cover the payment yourself, another option is to set the money aside in a separate bank account, so that you’re not scrambling come tax time. But if you end up needing to hire a nanny to come over several times a week, that tax payment could be much more. That’s probably a manageable amount to shell out come tax time. Under that scenario, unless you have been withdrawing payroll taxes over the course of the year, you’ll have to come up with $173.04 to settle the nanny’s portion of the tax, and an equal amount for your obligation as the employer. Extend that over a year, and it’s $2,262 - triggering the requirement that you pay the nanny’s payroll taxes. At the current federal minimum wage of $7.25 an hour, that’s $43.50. Let’s say you are looking to hire a nanny to come over a couple of nights a week for three hours. The IRS gives you the option to withhold your employees’ share of their Medicare and Social Security taxes from their paycheck, or to elect to pay their share yourself. To find out whether you have to pay state unemployment taxes, check here: / unemploy/agencies.asp.ģ. That would effectively lower your federal unemployment tax to 0.6 percent. You may qualify for a credit of up to 5.4 percent against the federal unemployment tax, however, according to the IRS. If your employee is paid $1,000 or more in any calendar quarter, then you must also pay federal unemployment tax of 6 percent of their annual wages. If your household employee is an immediate family member, your spouse, parent, or child under 21, you don’t have to pay any employment taxes.īe aware that you also could be on the hook for federal and state unemployment taxes. The IRS requires employers withhold additional Medicare tax if their employee makes more than $200,000 in a year. ![]() The employer covers half of those taxes (6.2 percent for Social Security and 1.45 percent for Medicare) and can withhold the other half from the employee’s paycheck. If that’s the case, you are required to pay 15.3 percent of their wages in Social Security and Medicare taxes. DETERMINE WHICH TAXES YOU ARE EXPECTED TO PAYĪssuming your nanny or other hire meets the household employee standard, it all comes down to whether you pay the person cash wages of $1,800 or more. So who wouldn’t be a household employee? If workers can control how they do the work, are self-employed or bring their own tools, they’re likely to be considered independent contractors.Ģ. ![]() Other examples of household workers: Drivers, home-health aides and maids. In the case of a nanny: “Any parent would have an almost impossible case to make that they don’t have the right to control the work that’s being done in their private home with their child,” says Kathleen Webb, president and co-founder of HomeWork Solutions, which provides payroll and tax services to people with household employees. ![]() #NANNYPAY WINDOWS 10 HOW TO#Meaning, you tell them what to do and how to do it, and perhaps provide the supplies - for instance, if you hire someone to mow your yard and they use your lawn equipment. The IRS defines a household employee as someone hired to do work in or around a home, at the direction and control of the person who lives in the home. Whether you’re on the hook for your nanny or maid’s payroll taxes begins with determining if he or she meets the IRS’s definition of a household employee, rather than an independent contractor. SORT OUT: INDEPENDENT CONTRACTOR OR HOUSEHOLD EMPLOYEE Here are six tips on how to make sure you’re not running afoul of the tax man when hiring household help:ġ. Digital Replica Edition Home Page Close Menu ![]()
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