Taxes For Nannies

Taxes For Nannies and other household Employees/Employers

DO I HAVE TO PAY THE NANNY TAX?
While many people disregard the need to pay taxes on household employees, they do so at the risk of stiff tax penalties. The rules governing household employees are quite complex and professional tax guidance is highly recommended.
A basic familiarity with these rules will make it easier to work with your tax advisor, saving you time, reducing tax costs, and avoiding tax penalties and interest charges.

UNDERSTANDING THE NANNY TAX Under the law, your nanny is considered a "household employee” because you control what work she will do or set requirements on how that work will be done. For any household employee, you may need to withhold (and pay) Social Security and Medicare taxes, pay federal unemployment tax, or both – depending on your nanny’s income.
Here is a quick breakdown:

  • If you paid your nanny $1,900 or more in 2015, you should withhold and pay Social Security and Medicare on all of her wages.
  • If you paid your nanny $1,000 or more in a quarter in 2015, you must pay the federal unemployment tax, or FUTA. (You may also owe state unemployment taxes.


WHEN YOU PAY NANNY TAXES, YOUR EMPLOYEE:
  • Has a legal employment history
  • May receive eligibility for important Social Security and Medicare benefits
  • May receive eligibility for unemployment insurance coverage
  • May receive eligibility for disability benefits
  • Can receive workers’ compensation
  • May qualify for Earned Income Credit.


FORMS AND PAYMENT
  • Form SS-4: Fill out Form SS-4 or apply online through the IRS to obtain your Employee Identification Number (EIN) – which you’ll need for tax forms. By the way, it's more secure to use an EIN than your Social Security number on forms you might lose!
  • Form W-2: Fill out Form W-2 if you pay Social Security and Medicare wages of $1,900 or more, and give Copies B, C and 2 to your nanny. Copy A (along with Form W-3) goes to the Social Security Administration.
  • Schedule H: If you pay your nanny cash wages of $1,900 or more file Schedule H.
  • Form I-9: Have your nanny complete this form when hired and be sure she shows you her Social Security card.
  • Form 1040: When you file your federal tax return, attach Schedule H to Form 1040. Pay by April 15.


FULL-SERVICE TAX PREPARATION FOR HOUSEHOLD EMPLOYERS/EMPLOYEES
O & G Tax and Accounting Services, Oklahoma's leader in household employment tax and payroll services. Our comprehensive and affordable “nanny tax” service has eliminated paperwork, minimized legal risk, maximized tax breaks, and generally made life easier for more than 1,000 families across the states.

  • Eliminate penalties, interest or costs of unnecessary accounting and legal fees;
  • Save time and money in your role as an employer;
  • Track and administer your nanny’s paychecks;
  • Withhold taxes and file timely, accurate tax returns;
  • Qualify for tax breaks and credits;
  • Stay informed on new and changing tax laws.


We can manage your tax filings for you for a reasonable price during tax season and all year round. We will advise you of all deadlines and prepare tax filings for your signature. This will provide you with peace of mind that you are in compliance with federal and state requirements. Contact Us today