PP you are dead wrong! The OP was asking about withholding taxes. You withhold for the state the employee lives in, not where they work. I am the 16:20 poster and a CPA. It isn't a requirement to w/h taxes but is a nice thing to do (and if their pay is the same weekly takes no time at all to calculate).

State taxes are due for wherever your nanny works, not where she lives. Just as your employer doesn't switch for you, you shouldn't be switching for her.

it is easy. You register with Maryland then they will supposedly send you a coupon booklet (we never got ours) to pay quarterly OR once you get your registration info back you can use their Business file site. It takes me about 5 minutes a quarter to record her wages and tax withheld and then have it deducted from our bank account.

Use a payroll service and they'll manage it all for you.

We are going to withhold nanny's state and federal taxes this year at her request. She lives in MD and we live (and she works) in DC. Is this going to be a huge pain? I know my employer in VA doesn't pay DC for me, I have to sort it out at tax filing time. How does this work?