The amount of income tax to be withheld from your household employee's pay will depend upon the filing status and exemptions claimed by your household employee on Form W-4.  You should get the Form W-4 from your household employee on or before her first day of work.  The W-4 certificate is in effect until your household employee files a new one.  If your household employee gives you a new Form W-4, you must start using it no later than the first payroll period ending on or after 30 days from the date you receive it.  You keep Form W-4 for your records; you do not send it to the IRS.  Remember, you do not have to withhold federal income tax on wages paid to a household employee for services performed in or about a private home, unless the employee asks for it and you agree to it. 

Form W-4 is also very important for using NannyPay software. You should take the information from your household employee's completed Form W-4 and check off the appropriate boxes in the Federal Withholding Options section of the NannyPay's Set Up window.  The NannyPay program will then calculate the appropriate amount of federal withholding.

Any income tax withholding you pay for your household employee without deducting it from his or her wages is additional income subject to income, Social Security, and Medicare taxes.  You must include it in boxes 1, 3, and 5 on the household employee's Form W-2.  You must also report this income on Schedule H.