Question about nanny and taxes
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Anonymous
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This is an embarrassing question but I'm new at this. We are considering hiring a nanny this fall when some friends of ours from our neighorhood will no longer be needing a nanny. I'm trying to figure out taxes, and made an initial call to the 4nannytaxes agency which some friends recommended that help with tax issues. I will be asking a few more questions of her current employer (my friend), but wanted to ask the general nanny-employing world: I understand that we need to account for SS, Medicare, and unemployment for tax purposes. We've been advised to take that total, and put it in a separate account, and pay to the IRS quarterly.
My question is this: do we as the employer deduct that from the nanny's paycheck? All of it? Some of it? In other words do we pay that on top of her salary? I definitely want to be a good employer and treat her well. I don't want to be cheap, we are committing to a nanny with the full knowledge that our childcare costs will go up and not down (we have two in daycare currently, and the oldest is starting school and the youngest will be two this fall), but I also don't know what the standard is. I had assumed that we would withold that money and pay it to the IRS, but my husband said, well, our employer takes it out of our paycheck! What is the standard practice....what is expected? We won't be paying health insurance because she gets that through her husband, we will be paying sick and vacation and we plan to be very generous with that). Thank you for any advice! |
Anonymous
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You pay your portion of the employer taxes separately from the nanny's salary.
Her portion comes from her salary, and can either be withheld by you on her behalf or be paid by her at tax time. |
Anonymous
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It is standard for the nanny to pay the customary portion of employee portion of FICA taxes (medicare and social security). The employer pays the other half. Unemployment insurance is paid solely by employers.
You can use a payroll service to handle tax issues for you, or if (you are hands on and cheap) some services will allow you to process payroll alone for a lower fee -- but you file your own quarterly taxes. I do that via Intuit. So far, we're without a hitch. (That said, it would be nice just to have the payroll service do it...if you have the $.) |
Anonymous
| *the customary employee portion of FICA taxes |
Anonymous
| Thank you! OP here and that seems reasonable. I'm relieved not to be expected to pay the full portion, but paying half or whatever it ends up being seems reasonable. Appreciate the responses. |
Anonymous
| Breedlove is another household payroll service. They have some good information about what is supposed to occur. I use them and have been very happy. I have an account I use only for nanny paychecks, taxes, etc. |
Anonymous
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You can download the rules that apply to you here:
http://www.4nannytaxes.com/index.cfm/resources/news-and-updates/household-employment-rules-by-state/ (I don't know what state you are in  )
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webbkathy
Member Offline
Member Offline
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OP:
Employment taxes are an employer responsibility - these are Social Security, Medicare and unemployment taxes. You may chose to deduct your employee's portion (7.65% of gross) or decide to pay her portion in addition to your employer portion. If you fail to deduct you have decided to pay her portion for her! You can not have her submit her 7.65% and you submit your 7.65% separately - all the payments are due from you. Individual income taxes are the employee's responsibility. You are NOT obligated to deduct the nanny's income taxes, and if you do not deduct you don't have any financial obligation for the income tax. Most employers with a full time nanny will offer to deduct income taxes to help the employee avoid a situation where she owes considerable taxes at year end. The FAQ at 4nannytaxes.com steps you through this, and the paycheck calculator will do the computations for you. Kathy Webb HomeWork Solutions/4nannytaxes.com |
Kathy Webb
HomeWork Solutions Inc.
http://www.HomeWorkSolutions.com
800.626.4829
Simplifying Nanny Tax Compliance Since 1993
HomeWork Solutions Inc.
http://www.HomeWorkSolutions.com
800.626.4829
Simplifying Nanny Tax Compliance Since 1993