August 2019

Nannies, Housekeepers and Taxes

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If you hire a nanny, housekeeper or other household worker who will earn at least $2,100 from you in 2019, you will have to pay employment taxes. Here’s what you need to know, courtesy of the Internal Revenue Service.

Workers will generally pay 6.2% for social security and 1.45% for Medicare taxes (for a total of 7.65%) from all cash wages, although you have the option to pay these taxes for your nanny, housekeeper or other household employees. You must, however, pay your employer’s share, which is another 7.65% for the same taxes on income earned by these home workers. While it’s unlikely, you will have to withhold an additional Medicare tax of 0.9% on any home worker who earns more than $200,000. The tax is on the excess over the amount.

You also need to complete Form W-2, the Wage and Tax Statement, for each employee, and a Form W-3, the Transmittal of Wage and Tax Statement. You are required to get an employer identification number, which you can do online, and get your employees’ social security numbers.

While not required, you have the option at the employee’s request to also withhold federal income taxes, for which you’ll have to get a completed Form W-4 from the employee. To learn more about these and other related taxes, talk to your tax professional.


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