When you hire a nanny, either temporarily or on a permanent basis, he/she is always your household's employee. They are not considered an independent contractor. This is determined by the nature of work he/she performs, not by the amount of money she is paid or the amount of time she works for you.​

 

Familes must also file the proper year end tax forms and supply their nanny with a W-2 form by January 31st of each year. Parents must also file form W-3 with the Social Security Administration by February 28th of each year.

 

You are not required to pay Social Security and Medicare unless you pay your nanny over $1800 in a calendar year (2013 figures). Unemployment insurance is paid when you pay a nanny over $1000 a fiscal quarter. Nannies are responsible for paying federal and state income taxes on all wages earned in a calendar year. If you pay a household employee cash wages of more than the amount specified by law in a tax year ($1,800 for 2012 and 2013), you generally must withhold social security and Medicare taxes from all cash wages you pay to that employee. (Cash wages include wages you pay by check, money order, etc.) Unless you prefer to pay your employee's share of social security and Medicare taxes from your own funds, you should withhold 7.65 percent from each payment of cash wages made. Your local IRS and State Department of Revenue offices can provide all of the forms you need to get started as a household employee. For further information please contact an expert household employment tax authority.

 

 

Recommended local Accounting and Tax Service:

 

Reece Accounting and Tax Service, LLC  

319-721-0457 or 319-646-2035

1306 1st Ave, Wellman, IA 52356

dee_reece@yahoo.com