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Information on paying the employment nanny tax. 
 
 
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Paying Nanny Taxes for Your Nanny
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Nanny Taxes

For someone who has a nanny, it can be complicated to calculate and pay the required employment taxes. Employment taxes? Yes, these are required for certain household employees. (Specifically, non-family member “nannies” who are paid $1,700 [the 2009 amount] or more in a single calendar year.)

Calculating Nanny Taxes

There are two ways to calculate the federal employment taxes for your household employee. The first is on form 1040 schedule H at the end of the year. Federal withholding, FICA, Medicare, and Federal Unemployment taxes can all be calculated and paid with your personal income tax return at the end of the year on this form. Because of the complicated nature of these calculations and the flow of the form itself, we strongly recommend having your tax preparer prepare it for you.
[ Free Nanny Tax Calculator ]

Nanny Tax Services and Nanny Payroll Services

The second way to handle the federal employment taxes for your nanny is have a payroll service copnay like GTM Nanny Tax and Paytoll Services work out the process for you. While you have the option of paying the taxes at the end of the year on Schedule H of your 1040, that means all the taxes are due at once. It might be better for your budget to submit the taxes throughout the year rather than at one time. As we mentioned above, there are four different types of taxes that need to be calculated, collected, and reported—even for nannies!

Since a nanny is an employee by classification, they are subject to voluntary federal withholding. This means that if they request to have federal income tax withholding taken out of their check, you, as the employer, have to comply and withhold this money. The second type of tax that a nanny’s wages are subject to is Federal Unemployment. These are paid by the employer rather than the nanny. This is a contribution to the Federal Unemployment Benefit pool. The third type of tax, is typically called Social Security or FICA tax. This is 6.2% of the nanny’s gross pay and is paid by both the employee and the employer. Finally, Medicare tax is 1.45% of the nanny’s wages and is paid by both the employer and the nanny.

Nanny Tax Info: Get Informed

As you can see there are several tax types and many details involved in calculating, paying and reporting employment taxes (see nanny tax forms) for nannies. Follow the steps carefully, and you will save yourself time and further expense.




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