Federal Nanny Tax Question
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Anonymous
| We switched from a nanny-share to paying a nanny's full salary ourselves half way through 2015. We've been withholding taxes and doing everything by the books. We use an online payroll service to ensure we're calculating things correctly and pay taxes throughout the year as required. When I used some tax software to figure out our own personal taxes for 2015, I was told I need to pay a $50 penalty for underpaying federal taxes this past year. The only fed taxes we owe are the nanny's federal taxes we withheld. Was I supposed to pay these monthly or quarterly? I didn't have this problem with 2014 taxes, though we do owe a lot more nanny federal tax now that we are no longer in a nanny share. I realize $50 isn't a lot, but if I'd know I was supposed to send the IRS the nanny's withheld taxes throughout the year, I certainly would have! |
Anonymous
| Did you owe last year (for 2014)? |
Anonymous
| The only taxes we owed in 2014 were the federal nanny taxes we withheld. |
Anonymous
| If you used an online payroll service, contact them and figure out what is going on. If there is a penalty, they are responsible for paying it, not you. |
Anonymous
If you owe over a certain amount, it doesn't matter why. You are then required to pay quarterly estimated taxes the next year. If you were an actual business, you would have to do this anyway, but since you are reporting nanny taxes on your personal return, the requirement kicked in as it would if you had underwithheld your personal income taxes. Until this year, our own withholding covered our nanny taxes, but we will likely have to pay quarterly next year, too. |
Anonymous
| Thank you for the responses. Helpful to know this isn't completely strange. |
Anonymous
| We pay quarterly estimated tax payments. We have a CPA help us out so I cannot tell you where you went wrong but I can say that while our nanny's salary did not change, her taxes went up in general. Since taxes are an estimate, probably they are just up a bit. |
Anonymous
It sounds like OP owed both years she had a nanny, not that anything changed. OP, if you want to stop making quarterly payments after next year (or maybe it's 3 years? I can't remember ...), you can increase your own withholding to cover the taxes you'll owe on the nanny at the end of the year. |
Anonymous
Did the amount you paid or made change in the last year? Either could mean that you would owe more. |