nanny taxes - how much more on top of pay to account for this?

[Anonymous]

Approximately how much do you pay for taxes on your nanny...say if you pay your nanny about $8 an hour how much more should you account for for taxes on top of that? I'm trying to calculate the total cost of what you'd be paying if the nanny is taking home $8 an hour.

[Anonymous]

Well that is a pretty low take home pay and how much the taxes are on top of that will depend on a lot of factors. The best things I can tell you to do is to use a tax calculator. Here is the one that I have found to be very useful https://secure.gtmassociates.com/calculator.aspx Just copy and paste this exact link and it will bring you straight to the calculator.

[Anonymous]

A good rule of thumb is 10% on top of her gross pay.

[Anonymous]

If you're looking for her take-home pay (after taxes) to be $8 per hour, you'll need to "gross up" her pay so that it's in the appropriate, reportable form (gross wages). To do that, you need to know 1) how many hours she'll work (the tax rates for employees are based on total amount of her pay -- i.e at 5 hours per week the tax rate would be much lower than 40 hours per week), 2) what are her Form W-4 selections (i.e. Single or Married, # of allowances), 3) what state she lives in. Those factors will determine her tax rate and therefore what the gross wages should be.

Once you know the gross wages, you can calculate the employer taxes. Like the other poster said, they're about 10% of the gross wages. However, there are childcare tax breaks that can offset most -- if not all -- of the employer taxes. Our calculator at http://www.mybreedlove.com/Answers/EmployeePaycheck.aspx allows you to do the gross up calculations as well as the employer taxes and tax breaks all at once.

If you have more questions about the budget or any other aspect of hte employment process, feel free to call. Household employer payroll, tax and HR is our business and we're happy to help.

Tom Breedlove
Breedlove & Associates