Nanny Taxes in Alaska
Household employers need to comply with tax, wage, and labor laws that affect nannies, in-home senior caregivers, and other household employees. While federal laws cover employers in all states, there are also state- and city-specific regulations that employers must follow. Here’s what you need to know about nanny taxes in Alaska.
Alaska Minimum Wage
Household employees must be paid at least the highest of the federal, state, or applicable local minimum wage rates. Alaska’s state minimum wage rate of $11.73/hour applies.
Overtime
Household employees in Alaska are required to be paid at least time and a half for hours worked over 40 in a seven-day workweek. Overtime compensation is not required for live-in employees.
Alaska State Unemployment Tax & Rate
In Alaska, both employers and employees contribute to state unemployment taxes. The maximum new employer SUI (state unemployment insurance) rate is 2.07 percent. For all employees, the withholding rate is 0.50 percent. Both rates apply to the first $49,700 of wages for an employee.
Workers’ Compensation Insurance
Household employers in Alaska are required to have a workers’ compensation policy for any household employee except part-time babysitters, cleaning persons, harvest help, and similar part-time or transient help. Get a quote on workers’ compensation insurance.
Helpful Links for Nanny Taxes in Alaska
Federal Regulations
All household employers need to follow certain federal regulations including:
Fair Labor Standards Act (FLSA) Classification Guidelines
- Household workers are considered employees and not independent contractors. Learn more about misclassifying employees as independent contractors.
- Household workers are also non-exempt employees, which means they receive overtime pay of at least time-and-a-half for hours worked over 40 per workweek. Learn more about overtime pay.
FICA Taxes
Social Security and Medicare taxes are commonly referred to as FICA taxes. If you pay cash wages of $2,700 or more to any household employee in 2024 (or will pay a domestic worker $2,800 or more in 2025), you must withhold and pay FICA taxes. FICA taxes are 15.3 percent of cash wages. As an employer, you pay 7.65 percent (6.2 percent for Social Security and 1.45 percent for Medicare). Your employee's share is also 7.65 percent, which you can withhold from their wages or choose to pay yourself. You don't withhold or owe FICA taxes on wages you pay to your spouse, child under the age of 21, parent, or any employee under 18 at any time during the calendar year.
Federal Unemployment Tax (FUTA)
If you pay a household employee total cash wages of $1,000 or more in any calendar quarter, you'll owe federal unemployment tax. This is an employer-only tax. FUTA is six percent of cash wages on the first $7,000 you pay an employee.
Mileage Reimbursement
If your employee uses their own car in the course of their work, you can reimburse them for mileage. For 2024, the IRS has set the optional standard mileage rate at 67 cents per mile driven. This rate increases to 70 cents per mile on January 1, 2025. Paying mileage is not mandatory or you can reimburse your employee at a different rate. However, if the cost of mileage causes your employee to fall below minimum wage, then you need to reimburse them for mileage.
GTM Can Help with Nanny Taxes in Alaska
Call (800) 929-9213 for a free, no-obligation consultation with a household employment expert. We’ll answer all your questions and show you how to comply with wage, tax, and labor laws as a household employer. Or, if you’re ready to have GTM Payroll Services handle it all for you, get started with our nanny payroll and tax service.
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Free Resources on Household Employment
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- Free eBook Chapter: Managing Payroll and Taxes
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- Employer Responsibilities
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- Government Websites for Household Employers