Taxes - one more time because I am slow!

[Anonymous]

If we pay our nanny 24 an hour, including her employee taxes, that means she nets about $20 an hour, right?

Going forward, we are looking for a new nanny and would like to pay less (we realize we're paying at the top of the market, at the time we needed to due to some family stressors) and our needs have changed at home. Is it reasonable to be looking for a nanny for $16 an hour and that they are responsible for their own taxes at the end of the year? Basically a 1099 employee .This would be for one new born and a 6 year old who is in school full time 40 hours a week. We're in NW dc and I am a part time WOHM.

Thoughts?

[nannydebsays]

Anonymous wrote:If we pay our nanny 24 an hour, including her employee taxes, that means she nets about $20 an hour, right?

Going forward, we are looking for a new nanny and would like to pay less (we realize we're paying at the top of the market, at the time we needed to due to some family stressors) and our needs have changed at home. Is it reasonable to be looking for a nanny for $16 an hour and that they are responsible for their own taxes at the end of the year? Basically a 1099 employee .This would be for one new born and a 6 year old who is in school full time 40 hours a week. We're in NW dc and I am a part time WOHM.

Thoughts?

No. You cannot 1099 a nanny. To pay a household employee legally, you must have them fill out a W4 before starting work, withhold their share of SS/Medicare taxes, possibly withhold Fed/State/Local taxes, submit your share of forms and payments to the IRS, and give your employee a W2 in January so that she can properly file her 1040 form.

IRS Form 926 covers your legal obligations, and googling "is nanny an employee" will garner you all sorts of useful and informative articles addressing your question.

[Anonymous]

No it is illegal to give a nanny a 1099. You can read it online a quick google search away.

It's fine to pay a nanny $16 hour. Many will apply but you can NOT 1099 the nanny.

If you're part time, why do you need a 24.7 nanny? Just curious.

[webbkathy]

Nannies are employees, not independent contractors. They get a W-2 form, and you at a minimum need to pay Social Security and Medicare taxes.

You can pay NET of employment taxes if you want, we don't recommend NET of all taxes.

http://www.4nannytaxes.com/index.cfm/resources/news-and-updates/nanny-employee-or-contractor/

[Anonymous]

Anonymous wrote:No it is illegal to give a nanny a 1099. You can read it online a quick google search away.

It's fine to pay a nanny $16 hour. Many will apply but you can NOT 1099 the nanny.

If you're part time, why do you need a 24.7 nanny? Just curious.

She said 40 hours/week. Where did you get the 24/7?

offer $16-$18 net. You will still need to pay FICA, unemployment, and worker's comp, which will add another 10% or so to your cost, but whe can be responsible for her own income taxes.

[Anonymous]

Sorry, 13:12 -- $16-$18 GROSS!!!

[Anonymous]

Anonymous wrote:Sorry, 13:12 -- $16-$18 GROSS!!!

So if you pay 16 or 18 an hour gross, you either need to deduct her share of the FICA taxes or your agree to pay her share and your share to the IRS - so the 16/18 hour would be NET of her employment taxes and she is responsible for income tax.

From 4nannytaxes : http://www.4nannytaxes.com/index.cfm/faq/nannyhousekeeper-faq-list/nannies-taxes/

The employer is solely responsible for the remittance of the Social Security and Medicare taxes. Should the employer fail to collect this tax from the employee via periodic payroll deductions, the employer remains responsible to remit or pay the tax to the IRS. The household employee CANNOT remit their share of Social Security and Medicare tax independent of the employer. There is no statue of limitation on the employer's nanny payroll tax obligations.