why are my taxes going up when I report nanny wages?
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Anonymous
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I'm probably being stupid about this, but I don't get it...
On TurboTax, on the screen to enter wages paid to the nanny, as soon as I do that my owed federal taxes shoot up. On an earlier screen I have already reported the quarterly payments that we sent in across the year last year. So, is it basically telling me at this point that we didn't pay enough? those were estimated by one of those nanny tax processing companies. any thoughts? |
Anonymous
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If you owe in total, you are not paying/withholding enough.
If you enter your quarterly payments in first, your owed taxes will go down. (Or your refund up) if you then enter the nanny wages, you increase your tax liability and you owe more. Turbo tax doesn't know or care what those quarterly payments are for, it has no idea you owe employment tax until you enter the wages. Hope I am explaining that well. I always enter in the nanny taxes before the deductions because I can't stand seeing the number get worse! |
Anonymous
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Anonymous
| PP again. I don't use a tax service, but I would guess they would be pretty accurate about the quarterly payments. If they know your nanny's salary and withholding, it's pretty straight forward. Are you sure it isn't the rest of your tax situation causing you to owe? You can to remove the quarterly payments and the nanny salary from turbotax as a test to see if your owed amount changes. |
Anonymous
| Yes, I'm sure, and that's what I find confusing. There's a substantial net increase in taxes after I enter both the quarterly payments and her wages. |
Anonymous
| What confused me the other year is that our tax service told us an estimated payment to send in Quarterly but that was really only based on our income and did not factor in payroll withholding for the nanny. That would be my guess about what occurred unless you sent in quarterly estimates based on your own income and then on top of that added the payroll portions quarterly. |
Anonymous
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PP again. Maybe I misunderstood your question. Here's a quick way to estimate what you should be paying in extra for nanny tax. Look at your nanny's w-2. You pay in double her ss withholding, double her Medicare withholding, and all of her income tax withholding. There's some extra for federal unemployment, but turbo tax calculates and gives you that number explicitly.
If your quarterly payments (or extra withholding -that's how we do it) are less than that, you are paying in too little. If they are not, I'd double check your turbo tax entry. |
Anonymous
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Honestly, I'd call a nanny tax company and ask.
Homework solutions, GTM, Breedlove... It may be the service you're using isn't doing it right. |
Anonymous
Who do you use? Mine went up and down by the exact same amount. We use Homework Solutions. |
Anonymous
| I owed 700+ this year, but only because I had not begun withholding for our part-time nanny until this January. Breedlove filed the back taxes for me, and warned me of the exact amount I would owe when I filed my taxes. They also sent me the Schedule H filled out already, so I just used their calculations to verify what Turbo Tax calculated. The amounts matched exactly. Again, not your situation, as I did not pay taxes, so was paying the back taxes. Did your service provide you with a Schedule H? |
Anonymous
| If your payments made and your Schedule H amount due are the same amount (they should be) your issue is with your payroll withholding. |