How do taxes work with a Nanny?

[Anonymous]

Do you pay them a 1099? How does this work exactly?

[Anonymous]

Almost all nannies are considered employees and not independent contractors. You'll give them a W-4 at the start of employment, withhold taxes, pay employer taxes, issue a W-2 at year end and file Schedule H with your personal tax return. That's a very simplified answer. I found this helpful: https://gtm.com/household/wp-content/uploads/Complete-Guide-to-Household-Payroll.pdf

[Anonymous]

Here are some relevant IRS documents; there are also state requirements for unemployment insurance, sick leave, and workman's comp; you'll need to look at your state's department of labor web site for that information:

https://www.irs.gov/taxtopics/tc756.html
https://www.irs.gov/publications/p926/ar02.html
https://www.irs.gov/businesses/small-businesses-self-employed/hiring-household-employees

[Anonymous]

Anyone use a good service for paying your nanny to make sure the taxes are done right and potentially offer benefits as well?

[Anonymous]

GTM Payroll Services is a service to check out: gtm.com/household. They do the payroll and taxes and also offer workers' comp, health insurance, 401k etc. as benefits for your employee.

[Anonymous]

Anonymous wrote:Anyone use a good service for paying your nanny to make sure the taxes are done right and potentially offer benefits as well?

We use Breedlove. I've been very happy with them.

[Anonymous]

Anonymous wrote:Do you pay them a 1099? How does this work exactly?

Nannies ARE NOT consultants. You must take out federal taxes and FICA. There are only about ten million threads about this not to mention Google!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Do you pay them a 1099? How does this work exactly?

Nannies ARE NOT consultants. You must take out federal taxes and FICA. There are only about ten million threads about this not to mention Google!

You may, but are not required to withhold taxes. If you don't nanny will have to pay estimated quarterly payments.

[Anonymous]

Anonymous wrote:You may, but are not required to withhold taxes. If you don't nanny will have to pay estimated quarterly payments.

I believe you are required to withhold Social Security and Medicare taxes (FICA). You must withhold income tax according to your employee's W4. However, it is not required if they don't want income tax withheld. They could pay quarterly or face a big tax bill at the end of the year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You may, but are not required to withhold taxes. If you don't nanny will have to pay estimated quarterly payments.

I believe you are required to withhold Social Security and Medicare taxes (FICA). You must withhold income tax according to your employee's W4. However, it is not required if they don't want income tax withheld. They could pay quarterly or face a big tax bill at the end of the year.

I thought I could let nanny pay her own taxes and got into a bit of a pickle. A colleague sent me to Homework and they helped me fix what I did in the beginning and now it all goes like clockwork. As someone else posted, there are thousands of Google results that tell you a nanny cannot get a 1099.