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Nanny Tax Info

How do you know if you have a household employee?

"You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done." - IRS, Publication 926 (2021), Household Employer's Tax Guide.

What constitutes household work?
Household work can be done in or around your home, some examples provided by the IRS include:
  • Babysitters, 
  • Butlers,
  • Caretakers,
  • Cooks,
  • Domestic workers,
  • Drivers,
  • Health aides,
  • Housecleaning workers,
  • Housekeepers,
  • Maids,
  • Nannies,
  • Private nurses, and
  • Yard workers.

Do you have to pay employment taxes?

IF you... THEN you need to...
Pay cash wages of $2,300 or more in 2021 to any one household employee.

Don't count wages you pay to:

  • Your spouse,
  • Your child under the age of 21,
  • Your parent, (visit Wages not Counted section under publication 926 on the IRS website for an exception) or
  • Any employee under the age of 18 at any time in 2021 (visit Wages not Counted section under publication 926 on the IRS website for an exception)

Withhold and pay social security and Medicare taxes.

  • The taxes are 15.3% of cash wages.
  • Your employee's share is 7.65% (You can choose to pay it yourself and not withhold it.)
  • Your share is 7.65%
Pay total cash wages of $1,000 or more in any calendar quarter of 2020 or 2021 to household employees.

Don't count wages you pay to:

  • Your spouse,
  • Your child under the age of 21, or
  • Your parent.

Pay federal unemployment tax.

  • The tax is 6% of cash wages.
  • Wages over $7,000 a year per employee aren't taxed.
  • You may also owe state unemployment tax.

NOTE: the table (found on the official IRS website) above covers the basics. For further clarity, please visit the IRS website, publication 926 for in-depth information. You may contact us by phone or chat messenger for additional information.

Follow this IRS Checklist to avoid fines

Checklist
When you hire a household employee

When you pay your household employee


By January 31, 2022

(Don't send Form W-2 to the SSA if you didn't withhold federal income tax and the social security and Medicare wages were below $2,300 for 2021)

By April 15, 2022

(Form 1040, 1040-SR, 1040-NR, 1040-SS, or 1041)

(If you don't have to file a return, file Schedule H by itself.)

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