Paying someone to watch your child may seem like a routine affair, but technically you probably become an employer the moment you hire babysitting services in your home. While there are exceptions for sitters under 18, babysitters can legally be seen as employees. This means you might owe babysitter taxes to the government.
Babysitter Tax Threshold for 2023
The babysitter tax threshold for 2023 is $2,600, which represents a $200 increase over the previous year. In simple words, if you pay a babysitter (age 18 or older) at least $2,600 in cash wages in 2023, the family and the sitter must pay Social Security and Medicare taxes. Most people don’t realize that they owe taxes when they hire a babysitter’s services. For example, if your babysitter works 4 hours a day for 30 days in 2023, and is getting paid $21.67/per hour, they owe these taxes.
What Makes Your Babysitter Your Household Employee?
According to the IRS guidelines, your babysitter (18 or older) is your household employee if you control what type of work they perform and how they perform it. It is not important how you pay the babysitter or from where you may have hired them. As long as you are determining what their job role is and how they carry it out, they are an employee in the eyes of the law. Sitters younger than 18 may also be considered employees if childcare is their primary occupation and they are not a student.
If you hire a babysitter from an agency, and the agency is in charge of what type of work is performed and how it is performed, or the babysitter determines it, they will not be treated as your employee. For example, if you are dropping off your kid to the babysitter’s home and the kid stays under their care in their home (not yours), then they are probably not considered your employee.
What Type of Babysitter Taxes You Might Owe?
FICA taxes, which cover Social Security and Medicare taxes, are usually divided equally between you (the employer) and the babysitter (the employee). Babysitter tax also includes federal income tax withholding. However, you are not required to contribute to it. The federal unemployment tax is also taken into account as part of babysitter taxes.
As stated in the previous sections, in 2022 if you are paying your babysitter cash wages of $2,600 or above, you may have a legal obligation to withhold Social Security and Medicare taxes from the babysitter’s earnings. As an employer, you would be required to pay half of these taxes. For 2023, you and your babysitter should each pay 7.65% each. The breakdown is:
- Social Security: 6.2%
- Medicare: 1.45%
The combined contribution from you and the babysitter will come to 2 x 7.65% = 15.3%. It is noteworthy that if you fail to withhold FICA taxes from the wages of your babysitter, the IRS will expect you as an employer to pay the full 15.3% in taxes. For babysitter tax calculation purposes, you only have to consider the employee’s cash wages. If you provide any additional things such as food or clothes, their value is not included for tax purposes.
Use NannyPay DIY Payroll Software to File Babysitter Tax
Good record keeping, accurate tax calculation, and timely tax payments are important to keep you on the right side of the law. You can eliminate any worries or hassles with regard to your payment of babysitter taxes with NannyPay DIY payroll software.
Without getting stuck with time-consuming and complex math, you can easily use the NannyPay automated tool to ensure that you are thoroughly prepared to file your babysitter taxes with confidence.