6 Steps To "Paying By the Rules" for Nanny Taxes STEP 1: Determining Your Household Employee's Employment Eligibility STEP 2: Registering with the IRS and State Revenue Departments STEP 3: Determining How Much You Must Pay Your Household Employee STEP 4: Determining What Taxes You Must Withhold STEP 5: Learning About Your Other Obligations STEP 6: Filing Reports and Paying the Government
Registering with the IRS as a Household Employer Once you have verified that your household employee can legally work for you, your next step is to register with the Internal Revenue Service (IRS) as a Household Employer. You do this by completing Form SS-4 and sending it to the IRS. The IRS will then assign you an Employer Identification Number, or EIN. An EIN is the number used to identify you as an employer, and will be placed on all your tax filings as an employer much like your Social Security number is used to identify you as an [...]
Important Tax Forms and Tax Dates for Household Employers By no later than January 30th, you are required to give a Form W-2 ("Wage and Tax Statement") to each household employee you hired the previous year. Form W-2 consists of several lettered and numbered copies. Copies "B", "C" and "2" are for your employee. Refer to our tax forms blog for the complete list of household employer forms. Remember, you are required to give each employee to whom you paid wages the previous year a Form W-2, even if they no longer work for you. If your employee leaves during [...]
Is your Nanny Legally Able to Work for you? Can your household employee legally work for you? This issue is all too often overlooked but should be on of the first questions you ask a potential employee. It is unlawful to employ, or continue to employ, any person as a household employee who cannot legally work in the United States. When you hire a household employee to work for you, you are responsible for verifying that this person is legally eligible to work in the United States. Verification your Nanny can Legally work in the US You and your household employee must [...]
Why You Shouldn't Pay Your Nanny "Under the Table"? 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. 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. In the event of an audit, you, as the household employer, will be ultimately responsible for all FICA and other employment taxes that are owed to the government on your nanny’s wages, even if you did not withhold the nanny’s [...]
NannyPay has Been Helping Families with Taxes for Almost Two Decades If you are a first-time household employer, you've probably already learned that finding the "right" nanny or other household employee is a difficult task. Although finding a trustworthy, competent household employee is your first priority, families who choose to hire their own household help will also need to understand the "nanny tax" laws, Social Security rules, and immigration regulations. Understanding the Nanny Tax Laws Are the NannyTax laws complicated? The surprising answer, is "No, not really". In our experience, most people who take the half hour or so to [...]
Keeping IRS Records of your Household Employees As a Household Employer, you must keep all your records on your household employee's income and employment taxes, including Social Security, Medicare, federal unemployment taxes, federal income tax withholding, and advance payment of earned income credit, for at least 4 years after the due date of the return or after the tax is paid, whichever is later. Information you Should Maintain as a Household Employer Your employer identification number; (EIN) Copies of returns you have filed; Dates and amounts of any deposits or payments you made; Each household employee's name, address, and Social [...]
The Nanny Tax Law Origins Until 1994, if you paid a nanny, babysitter, gardener, or any other household employee more than $50 in any calendar quarter, you were obligated to withhold FICA contributions from that person's wages and to remit those taxes, together with your share of FICA tax, to the IRS. You were required to do this every three months on a quarterly basis using IRS Form 942, the Household Employer's equivalent of the business employer's Form 941. At the end of the year, you were required to file a final Form 942 as well as a separate [...]
Social Security and Medicare Taxes for Household Employees The Income Test for Social Security and Medicare Taxes Remains at $2,800 for 2025. You do not have to withhold or report Social Security or Medicare taxes for household employees that you pay less than $2,800 this year. The FUTA annual threshold remains the same at $1,000. Babysitter Exception Caregivers to whom you pay $2,800 or more, but who are age 17 or younger, are not considered household employees for whom you must withhold and pay FICA taxes unless providing household services is that person's principal occupation. If the caregiver is [...]
Household Employer Tax Forms The following is a listing of IRS Publications, Forms and Notices that contain information you may need as a Household Employer: Publications 15 (Circular E) Employer's Tax Guide 505 Tax withholding and Estimated Tax 926 Household Employers Tax Guide Forms (and Instructions) SS-4 Application for Employer Identification Number SS-5 Application for a Social Security Card W-2 Wage and Tax Statement W-3 Transmittal of Income and Tax Statements W-4 Employee's Withholding Allowance Certificate W-10 Dependent Care Provider's Identification and Certification 2441 Child and Dependent Care Expenses Schedules Schedule H Household Employment Taxes Notices 1036 Early Release [...]
