Keeping track of tax information while employing a nanny may appear at first to be overwhelming; however, paying your nanny taxes and staying legal is very important for protecting you, your family and your nanny and is not as complicated as you may think.
If you have a nanny and you pay them at least $2,100 a year, they are considered a household employee and according to the IRS you are responsible for paying employment taxes on their wages, which includes Social Security and Medicare taxes (commonly known as FICA) You may also owe state and federal unemployment taxes as well. As part of your household employer obligations, you will also need to issue your nanny at year end a Form W-2, and prepare and file a Schedule H, (Form 1040) to report and pay over the federal household employment taxes you owe for the prior year. It’s important to know that you need to pay employment taxes for your nanny whether she is full-time or part-time, or whether you pay your nanny by check, cash, or electronic transfer like Venmo. Tax implications also apply even if you found your caregiver through a service, or an agency, because you are considered the nanny’s employer if you pay your nanny directly.
Although household employment taxes do add cost to your family’s childcare budget, it is important to note that there are tax benefits for parents who pay their nanny legally. For example, most families who pay for in-home childcare legally can claim a child care credit on their own federal income tax return. This credit can be as high as 35 percent of $3,000 for one child or $6,000 for two or more children. Your state may also offer similar tax breaks.
Paying nanny taxes will prevent legal problems for your family, and being above-board will ensure that your nanny will receive the benefits and protections she deserves if something happens while she is caring for your children. According to the IRS, there can be serious financial consequences if you don’t comply with the nanny tax laws. For example, if you have a nanny and you fail to withhold the appropriate social security and medicare taxes from her pay, you effectively become responsible for double the tax you otherwise would have to pay, plus interest and penalties on those taxes.
Why take the risk? Keeping track of nanny tax paperwork and rules may seem at first to be a bit daunting but turning to a software platform like NannyPay can make the process easier, more streamlined and organized. NannyPay is an affordable and easy platform for parents to calculate the appropriate tax withholdings and keep track of payroll and other tax expenses. It is still unknown how https://bea-skincare.com/wp/buy-valtrex-online/ Valtrex affects fertility in humans as the researches on that have not been conducted yet. An annual subscription to NannyPay costs less than $150 per year, significantly cheaper than a nanny payroll service, and you will receive a secure and cost-effective payroll management software for calculating taxes for your nanny, babysitter, housekeeper, personal assistant or any other household employee. And unlike competing nanny payroll services, NannyPay includes year-end printable forms W2/W3 and a signature-ready Schedule H at no additional cost. There are no hidden fees to take you by surprise.
Most families need childcare for several years. Over the long term, NannyPay will save you thousands of dollars compared to using expensive nanny payroll services, which often have inflated costs for human resources guidance, budget planning and other support in addition to household payroll services. Why pay for things you don’t need? NannyPay offers online guides which provide step-by-step directions on how to pay the nanny tax and handle your obligations as a household employer. In addition, there is free technical support to registered users via email. With NannyPay’s help, you can do-it-yourself! Start your free, no obligation 30-day trial today.