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August
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You've hired a nanny...now what?
I've worked for GTM Payroll Services for 11 years and one of the most common questions I've heard over the years is, "I've just hired a nanny. Now what do I do?" From reading many of the posts on this site, I've come to understand how familiar that question is and that many people are in the same situation, wondering what their responsiblities are. I am hoping this article helps.
So you’ve decided to hire a nanny; you’ve made an offer and it’s been accepted. Now what? Chances are that you’ll now need to become familiar with the term nanny tax. According to IRS Publication 926, once an employee is paid $1800 or more in compensation from one employer, those wages are subject to Social Security and Medicare tax withholding. Employing someone in your home is a genuine business and is recognized as one by the federal, state and local governments.
Usually one of the first questions to come up is: Does the nanny file her own taxes – or do I? The answer to that is household employers are ONLY required to withhold Social Security and Medicare taxes for a nanny. The nanny is responsible for filing his/her own Federal and State income taxes. However, although employers are not required to withhold income taxes, when clients ask us, we usually recommend doing so. This way, nannies are not left with a big tax bill to pay when they file their tax return.
