{"id":2111,"date":"2019-03-27T13:40:08","date_gmt":"2019-03-27T13:40:08","guid":{"rendered":"https:\/\/www.irstaxapp.com\/?p=2111"},"modified":"2019-03-27T13:40:50","modified_gmt":"2019-03-27T13:40:50","slug":"nanny-tax-do-you-have-to-pay-taxes-for-a-caregiver","status":"publish","type":"post","link":"https:\/\/www.irstaxapp.com\/nanny-tax-do-you-have-to-pay-taxes-for-a-caregiver\/","title":{"rendered":"Nanny Tax : Do You Have to Pay Taxes for a Caregiver ?"},"content":{"rendered":"\n<figure class=\"wp-block-image\"><picture><source srcset=\"https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2019\/03\/do-you-have-to-pay-taxes-for-a-nanny-600x333.webp 600w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2019\/03\/do-you-have-to-pay-taxes-for-a-nanny-300x167.webp 300w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2019\/03\/do-you-have-to-pay-taxes-for-a-nanny.webp 810w\" sizes=\"(max-width: 810px) 100vw, 810px\" type=\"image\/webp\"><img src=\"https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2019\/03\/do-you-have-to-pay-taxes-for-a-nanny.jpg\" height=\"450\" width=\"810\" srcset=\"https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2019\/03\/do-you-have-to-pay-taxes-for-a-nanny-600x333.jpg 600w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2019\/03\/do-you-have-to-pay-taxes-for-a-nanny-300x167.jpg 300w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2019\/03\/do-you-have-to-pay-taxes-for-a-nanny.jpg 810w\" sizes=\"(max-width: 810px) 100vw, 810px\" class=\"wp-image-2223 sp-no-webp\" alt=\"\" decoding=\"async\" loading=\"lazy\"  > <\/picture><\/figure>\n\n\n\n<p>Nanny tax is federal withholding tax including  social security and Medicare employment taxes that you become responsible to deduct at source and deposit to treasury from the payments made to a household employee . In other words, Internal Revenue Code considers you an employer for a nanny  that you hired for your kids and him\/her as your employee.The rational behind  treating Nanny or Caregivers as your employee is that  the Individual\/family who hired them  has the right to tell the caregivers what needs to be done. This job contract fulfills employer-employee relationship between them.  So, IRS rules for tax withholding and other  social security and Medicare employment taxes withholding laws also apply on you .<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_62 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-662d97c2320ab\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-662d97c2320ab\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.irstaxapp.com\/nanny-tax-do-you-have-to-pay-taxes-for-a-caregiver\/#What_if_Nanny_is_a_Family_Member\" title=\"What if Nanny is a Family Member ?\">What if Nanny is a Family Member ?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.irstaxapp.com\/nanny-tax-do-you-have-to-pay-taxes-for-a-caregiver\/#When_is_Nanny_Tax_Not_Payable\" title=\"When is Nanny Tax Not Payable?\">When is Nanny Tax Not Payable?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.irstaxapp.com\/nanny-tax-do-you-have-to-pay-taxes-for-a-caregiver\/#Nanny_Taxes_Threshold_2019\" title=\"Nanny Taxes Threshold 2019\">Nanny Taxes Threshold 2019<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.irstaxapp.com\/nanny-tax-do-you-have-to-pay-taxes-for-a-caregiver\/#How_to_Pay_the_%E2%80%9C_Nanny_Tax_%E2%80%9D\" title=\"How to Pay the \u201c Nanny Tax \u201d\">How to Pay the \u201c Nanny Tax \u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.irstaxapp.com\/nanny-tax-do-you-have-to-pay-taxes-for-a-caregiver\/#File_Form_941_If_You_Have_Proprietorship_Business\" title=\"File Form 941 If You Have Proprietorship Business\">File Form 941 If You Have Proprietorship Business<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.irstaxapp.com\/nanny-tax-do-you-have-to-pay-taxes-for-a-caregiver\/#Is_Nanny_Tax_Deductible\" title=\"Is Nanny Tax Deductible ?\">Is Nanny Tax Deductible ?<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_if_Nanny_is_a_Family_Member\"><\/span>What if Nanny is a Family Member ?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Special rule applies in case  the nanny or caregiver is  your spouse, parent, or child (or a non-related student under age 18) . The first rule is that the payment to family member for being caregiver is not subject to withholding tax . Even if your family caregiver is not considered your employee, the caregiver who earned from you , must still report the compensation as income on his or her <a rel=\"noreferrer noopener\" href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f1040.pdf\" target=\"_blank\">Form 1040<\/a>, and may be required to pay self-employment tax depending on the facts and circumstances.  Please read <a rel=\"noreferrer noopener\" href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/p926.pdf\" target=\"_blank\">Publication 926, the IRS\u2019s Household Employer\u2019s Tax Guide<\/a>, for more information <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_is_Nanny_Tax_Not_Payable\"><\/span>When is Nanny Tax Not Payable?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>You dont need to pay Nanny Tax in following circumstances<\/p>\n\n\n\n<ul><li>If you take your kids to a day care center or to someone\u2019s house, you don\u2019t have to pay nanny tax because , in such cases ,the child care workers may be employees of the day care center, independent contractors or part of another type of business. <\/li><li>If your child is cared for by your relatives like spouse, your child under age 21, your parent, or any child under 18, and you pay them for caregiving service .<\/li><li>If you are paying to a high school student for Nanny or babysitter services .<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nanny_Taxes_Threshold_2019\"><\/span>Nanny Taxes Threshold 2019<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The threshold for paying &amp; complying with nanny tax for 2019 remain same as 2018 .Employers paying a single household employee more than $2,100 annually , is required to pay FICA taxes and issue Form W-2 to the employee.\u00a0 However,you must pay <strong><em>employment taxes<\/em><\/strong> if you pay your nanny \u2013 or any household employee: a total of $1,000 to your employees during any quarter<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Pay_the_%E2%80%9C_Nanny_Tax_%E2%80%9D\"><\/span>How to Pay the \u201c Nanny Tax \u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Household employers file and pay the exact same employment taxes as commercial employers do.   <strong>Form 1040 Schedule H<\/strong> is for the household payroll tax reporting. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 1:<\/h3>\n\n\n\n<p> Collect certain informtion and statements from your caregiver <\/p>\n\n\n\n<ul><li>His\/her Social Security number or an Individual Taxpayer Identification Number, <\/li><li>Ask him\/her to give you a completed <a href=\"http:\/\/www.uscis.gov\/sites\/default\/files\/files\/form\/i-9.pdf\" target=\"_blank\" rel=\"noopener\">Form I-9<\/a> <\/li><li>A completed  federal Form W-4, <\/li><li>A state income tax withholding form (if your state has an income tax). <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Step 2:<\/strong>&nbsp;<\/h3>\n\n\n\n<p>If you and the employee have agreed for tax withholding ,you need to deduct &amp; deposit the tax . Please consult   the tables in <em><a href=\"https:\/\/www.irs.gov\/publications\/p15\/index.html\" target=\"_blank\" rel=\"noopener\">IRS Publication 15, Employer\u2019s Tax Guide<\/a><\/em>, to&nbsp;<a href=\"https:\/\/www.irs.gov\/publications\/p15\/ar02.html#en_US_2015_publink100017482\" target=\"_blank\" rel=\"noopener\">determine the correct amount to<\/a>&nbsp;withhold.<\/p>\n\n\n\n<p>In addition, you should withhold 7.65 percent of the wages to cover the Social Security and Medicare taxes your employee has to pay and add  7.65 percent of each employee\u2019s wages to Social Security and Medicare taxes from your side.So basically , you need to deposit 15.3 % per employee ! <\/p>\n\n\n\n<p style=\"background-color:#f8f1c1\" class=\"has-background\">Remember you  don\u2019t have to deduct social security or Medicare taxes from payments of  caregiver service to your spouse or son or  parent or anyone under age 18.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Step 3:<\/strong>&nbsp;<\/h3>\n\n\n\n<p>Pay estimated tax payments each quarter or increase the amount of income tax your employer withholds from your pay . This is important for avoiding interest &amp; penalties.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Step 4:<\/strong>&nbsp;<\/h3>\n\n\n\n<p>You should file Schedule H, Household Employment Taxes, with your individual income tax return. On <strong>Schedule H<\/strong>, you\u2019ll report:<\/p>\n\n\n\n<ul><li>Federal income tax you withheld from your employee\u2019s pay.<\/li><li>Federal Unemployment Tax (FUTA) if you paid cash wages to household employees totaling more than $1,000 in any calendar quarter during this year or the prior year. <\/li><li>Social Security and Medicare tax. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Step 5:<\/strong>&nbsp;<\/h3>\n\n\n\n<p>At the end of the year, complete Form W-2 for each employee and provide copies to them. You must also send a summary Form W-3 to the IRS.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"File_Form_941_If_You_Have_Proprietorship_Business\"><\/span>File Form 941 If You Have Proprietorship Business<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> The household employers are required by IRS to report Nanny Tax or babysitter employees payments  using form Schedule H of Form 1040 which is an annual exercise . But the household employers who are sole proprietors of a business or farm can include their household payroll on the 941, 943 or 944 return (<a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/p926.pdf\" target=\"_blank\" rel=\"noopener\">See Publication 926<\/a>).   So ,  household employers who run a sole proprietor business , <strong>must  files Form 941 to report taxes  and not Schedule H. <\/strong>Some important points related to filing of 941 are:<\/p>\n\n\n\n<ul><li>Form 941must be filed and paid <strong>every quarter<\/strong>. <\/li><li>Even if there was no household payroll in a quarter, you must file form 941 , because failure to file 941 will trigger penalties. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_Nanny_Tax_Deductible\"><\/span>Is Nanny Tax Deductible ?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The answer is YES. You can claim child care tax credit   which allows you to itemize up to $3,000 in care expenses per child per year provided you pass the  \u2018tests\u2019 set by IRS .Essentially these tests mean:<\/p>\n\n\n\n<ol><li> the  caregiver must be employed to care for a qualifying person<\/li><li>You (and your spouse if married) must have earned income; and <\/li><li>The nanny\u2019s care must be required so you can work. <\/li><\/ol>\n\n\n\n<p>Please read more <a href=\"https:\/\/www.irstaxapp.com\/child-tax-credit-2018-2019-simplified\/\">article on  child tax credit <\/a><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Nanny tax is federal withholding tax including social security and Medicare employment taxes that you become responsible to deduct at source and deposit to treasury from the payments made to a household employee . In other words, Internal Revenue Code considers you an employer for a nanny that you hired for your kids and him\/her [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2223,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[54],"tags":[],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts\/2111"}],"collection":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/comments?post=2111"}],"version-history":[{"count":0,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts\/2111\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/media\/2223"}],"wp:attachment":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/media?parent=2111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/categories?post=2111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/tags?post=2111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}