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

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]You don't have to pay her federal income tax quarterly if you withhold it.[/quote]

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). [/quote]

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. [b]All federal domestic employer taxes can be paid on your return by April 15. See IRS Publication 926[/b].[/quote]

This is [b]partially[/b] 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.[/quote]

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