Nanny Taxes: End-of-Year Documents

Oct 31, 2024 | Household Payroll & Taxes

Paying your nanny legally is essential not only for compliance with tax, wage, and labor laws but also for financial peace of mind. Read on to learn what documents are needed at tax time so you and your nanny can file your tax returns, and the potential consequences of mismanagement. By understanding these aspects, you can effectively manage nanny taxes and ensure legal compliance. Proper documentation is pivotal when it comes to nanny taxes and payroll.

Here are the documents you will need for year-end filing:

W-2 Wage and Tax Statement: This provides an overview of employee income earned and taxes withheld. You are required to give your nanny a Form W-2 by January 31 each year. You are also required to submit a copy to the Social Security Administration by that same date.
W-3 Transmittal of Wage and Tax Statements: This form provides an overview of the employer’s total payroll information, including wages and taxes withheld. It must be submitted to the Social Security Administration by January 31.
Schedule H: Household Employment Taxes- This is filed with your personal tax return and reconciles the nanny taxes you’ve paid (Social Security, Medicare, and federal unemployment) against what is owed. It is required if you paid your nanny $2,700 in 2024 (or will pay them $2,800 or more in 2025).

Failure to comply with nanny tax regulations can lead to serious financial consequences.

Some potential repercussions include:

Penalties and Interest: The IRS and state tax authorities can impose significant penalties, payment of back taxes, and/or interest charges for late or incorrect tax filings and payments.
Audits: Non-compliance can trigger audits, which can be time-consuming and stressful.
Legal Issues: In some cases, mismanagement of nanny payroll can even lead to legal action by your employee.

By carefully managing nanny payroll and taxes, you can comply with tax and wage laws and avoid potential penalties. One of the best ways to help ensure compliance is by partnering with a payroll service. GTM will handle all year-end tax forms for you, accurately and on time. Want to learn more about our services? Call (800) 929-9213 for a complimentary, no-obligation consultation.

GTM Can Help

By carefully managing nanny payroll and taxes, you can comply with tax and wage laws and avoid potential penalties. One of the best ways to help ensure compliance is by partnering with a payroll service. GTM will handle all year-end tax forms for you, accurately and on time. Want to learn more about our services? Call (800) 929-9213 for a complimentary, no-obligation consultation. Or schedule time with us at your convenience.