You can also apply for an EIN online, and get one within minutes. It gives you a specific tax number for dealing with the IRS and other relevant agencies. New household employers have a few forms they need to get and complete to get started:įorm SS-4 : This is an application for Employer Identification Number (EIN) which must be filed by all household employers. You will use Schedule H to add your share of the FICA taxes to your total tax obligation, as well as to calculate the FUTA tax you owe. You withhold these taxes from your employee’s wages during the year, and then match that amount when remitting these taxes to the IRS by April 15 of the following year, typically by completing a Schedule H and filing it along with your personal Form 1040. Your employee’s share of FICA taxes is 6.2% of gross wages for social security, and 1.45% for Medicare. Only you as the employer will pay FUTA, but both you and your employee share the social security and Medicare taxes (sometimes collectively called FICA) equally. If you have a household employee and paid them more than $2,400* last year, federal law requires you to withhold and pay social security and Medicare taxes on your employee’s wages, and pay federal unemployment tax (FUTA) as well. That’s because you as the employer control: Do I Owe the Nanny Tax?Īccording to the law, if a person works as a nanny in your home, that person is your household employee – not an independent contractor – no matter what you call them. In long run, if you fail to pay your nanny legally, and get caught, it can cost you an average of $25,000 in fines and interest plus the taxes you owe. Although some nannies may even ask to be paid “under the table”, a family that agrees to such an arrangement is taking significant legal and financial risks. Although household employment tax laws certainly add an additional expense to your childcare budget, you really can’t afford not to comply with the law. In fact, you don’t need to do anything.Tax season is here! In this article, you’ll find a quick checklist of things you need to know about about filing your nanny taxes the right way.įirst, let’s be frank. Summarizes the state income taxes withheld on behalf of your employee.īreeze. In some states, household employers are required to submit an annual reconciliation, which.This is how you report household employment taxes like social security, Medicare, or FUTA taxes, and federal income tax withholding. You will need to put together a Schedule H and attach it to your annual federal income tax return.You also need to submit a Form W-3 to the Social Security Administration which provides a summary of all wages paid and withholdings collected by you throughout a calendar year.They will need this to complete their personal income tax return. The W-2 reports your employee's annual wages and the amount of taxes withheld from their paychecks. After the conclusion of the year, you need to provide each employee with a completed Form W-2. As a household employee, you have some year-end responsibilities:
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