Q. re how often (quarterly or just in April) nanny pays income tax if employer does not withhold it

[Anonymous]

I'm looking to hire a PT nanny for 15 hours a week. I really don't want to withhold income tax.

However, I want to educate her on paying her federal and VA income taxes if we don't withhold it. I'm not well versed in nanny taxes. If we, as her employer, do not withhold her federal and VA income taxes, does she only have to file it when she files her W-2 on April 15th or does she need to do quarterly payments like we do when we file Form 1040-ES (when we pay Social Security and Medicare taxes (employer and employee portions), the federal unemployment tax (FUTA))? I ask because if we did withhold her income taxes for her, we'd pay them quarterly through Form 1040-ES. I'm wondering if this means she has to pay them quarterly if we don't withhold them.

[Anonymous]

Please don't be so lazy. Pay the taxes.

[Anonymous]

My boss withholds my VA taxes but not my FED tax. I pay my fed tax using form 1040-ES.

[Anonymous]

If she doesn't pay quarterly she will have to pay penalties.

[Anonymous]

You don't have to pay her federal income tax quarterly if you withhold it.

[Anonymous]

Anonymous wrote:You don't have to pay her federal income tax quarterly if you withhold it.

This! In md we pay the employer portion fica and the unemployment insurance quarterly. The federal goes on our tax return in April. We withhold taxes from the nanny and take care of it all and have my MIL do the taxes (she's a cpa).

[Anonymous]

Anonymous wrote:

Anonymous wrote:You don't have to pay her federal income tax quarterly if you withhold it.

This! In md we pay the employer portion fica and the unemployment insurance quarterly. The federal goes on our tax return in April. We withhold taxes from the nanny and take care of it all and have my MIL do the taxes (she's a cpa).

You can pay the FICA at the end of the year, too. The only thing that has to be paid quarterly are any state taxes because the state requires it. All federal domestic employer taxes can be paid on your return by April 15. See IRS Publication 926.

[Anonymous]

Answer - she needs to pay quarterly to avoid penalties. A CPA can help her with an estimate.

[Anonymous]

Anonymous wrote:Answer - she needs to pay quarterly to avoid penalties. A CPA can help her with an estimate.

That's not true. She can pay her income taxes in April.

[Anonymous]

Yes, she can pay in April but there will be penalties.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You don't have to pay her federal income tax quarterly if you withhold it.

This! In md we pay the employer portion fica and the unemployment insurance quarterly. The federal goes on our tax return in April. We withhold taxes from the nanny and take care of it all and have my MIL do the taxes (she's a cpa).

You can pay the FICA at the end of the year, too. The only thing that has to be paid quarterly are any state taxes because the state requires it. All federal domestic employer taxes can be paid on your return by April 15. See IRS Publication 926.

This is partially true. The nanny taxes get added to your 1040 income tax obligations. These are subject to underpayment penalties depending on circumstances.

From the IRS: Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, or if they paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.
https://www.irs.gov/taxtopics/tc306.html

So if your taxable AGI is 225K you will owe income tax of about 43K with one child. If you have a 40K nanny your nanny tax will add $6200 to your tax bill or 14%. So you could easily owe an underpayment penalty if you don't pay those nanny taxes in quarterly estimates or adjust your paycheck withholding to pay in the extra tax throughout the year.