MD Tax Question

[Anonymous]

Our nanny is retiring at the end of the school year so we need to find someone new. Since I expect it will take a while to find a replacement and I don't want to rush the process I plan on hiring a college student for the summer. We obviously pay taxes for our current nanny but I am unsure if we would have to pay taxes for a college student who would be working for us 50 hours per week for 8 weeks. Does anyone know? After tax season I will call an accountant, but I thought I would check here to see if anyone has any experience in this area.

Thank you.

[Anonymous]

Yes. If you pay someone more than $1700 in a quarter, you have to pay FICA, unemployment insurance, and, legally, workers comp.

[Anonymous]

OP here- Thanks, this is helpful.

[Anonymous]

Yes. You'll exceed the minimum compensation levels and triggers requiring withholding. Only way around it would be to employ more than one student and alternate (or split the time) so that you don't go over the minimum. (Assuming you want to do it legally of course. This is certainly an instance where a cash deal is pretty unlikely to cause a major issue.)

[Anonymous]

Anonymous wrote:Yes. You'll exceed the minimum compensation levels and triggers requiring withholding. Only way around it would be to employ more than one student and alternate (or split the time) so that you don't go over the minimum. (Assuming you want to do it legally of course. This is certainly an instance where a cash deal is pretty unlikely to cause a major issue.)

9:01 here: I would consider one of these strategies, because you will have to pay a lot more unemployment if you do this legally this year. You'll be paying the max for the year on your old nanny, quite likely the max on your new nanny in the fall (or is there no new nanny?), and close to it for the summer nanny.

Another reason to consider 2 (or even 3) part-timers is that it may be easier to find someone temporary that way.

[Anonymous]

Thank you for all the info. Based on this intel I think we will quickly get our act together to find a permanent nanny/housekeeper (both kids will be in school full time this Fall).