{"id":30639,"date":"2024-07-18T12:16:54","date_gmt":"2024-07-18T16:16:54","guid":{"rendered":"https:\/\/gtm.com\/household\/?p=30639"},"modified":"2024-07-18T15:42:51","modified_gmt":"2024-07-18T19:42:51","slug":"how-to-pay-nanny-taxes-yourself","status":"publish","type":"post","link":"https:\/\/gtm.com\/household\/how-to-pay-nanny-taxes-yourself\/","title":{"rendered":"How to Pay Nanny Taxes Yourself"},"content":{"rendered":"
\"how-calculate-nanny-taxes-yourself\"

When you hire someone to work in your home, you become an employer. And with that designation comes employment tax responsibilities, commonly called \u201cnanny taxes.\u201d So, how do you pay nanny taxes and make sure everything is correct? There are a few ways to tackle this, including doing it yourself. If you’re ready to take this on, here are seven steps to paying nanny taxes yourself.<\/p><\/div>\n

When you hire someone to work in your home \u2013 like a nanny, housekeeper, or senior caregiver \u2013 or join a nanny share, you become an employer. And with that designation comes employment tax responsibilities, commonly called \u201cnanny taxes<\/a>.\u201d<\/p>\n

You\u2019ll want to get this part of household employment right, as mistakes \u2013 even unintentional ones \u2013 can be costly. Paying \u201coff the books\u201d and skipping your nanny tax obligations<\/a> completely is even worse.<\/p>\n

So, how do you pay nanny taxes and ensure everything is correct? There are a few ways to do it, including paying nanny taxes yourself.<\/p>\n

What are nanny taxes?<\/h2>\n

Nanny taxes include Social Security and Medicare (FICA) and federal and state unemployment.<\/p>\n

In some states, the family and\/or employee may need to contribute to a paid leave program.<\/p>\n

While not considered a tax, workers\u2019 compensation coverage and\/or disability insurance may also be a household employer requirement in your state<\/a>.<\/p>\n

Most families pay about 9-12% of their nanny\u2019s wages in employment taxes.\u00a0There are ways to reduce \u2013 and even eliminate \u2013 your nanny tax responsibilities<\/a>\u00a0through tax savings programs and credits.<\/p>\n

Paying nanny taxes using a payroll service<\/h2>\n

Signing up with a nanny payroll service<\/a> is the easiest way to pay your nanny and remit your employment taxes. Not every payroll service is the same, so you\u2019ll want to find one that is the best fit for your needs<\/a>. Essentially, you\u2019ll input your nanny\u2019s wages, and the service will calculate how much to pay your employee and what to withhold in taxes. More comprehensive services will take care of sending a check to your nanny or paying them by direct deposit and holding on to your employer as well as employee taxes to remit to the IRS and state tax agency every quarter.<\/p>\n

Paying nanny taxes using an accountant<\/h2>\n

Some families rely on their accountants to handle their nanny taxes. If your accountant knows the ins and outs of household employment, this could be a good way to go. However, accountants may not be familiar with paying nanny taxes because they may not have many clients with household employees. Or they don\u2019t know the nuances of household employment \u2013 especially on the labor side \u2013 that can land a family in trouble. Accountants may not want to deal with nanny taxes and focus their time on more profitable work. Many firms refer their clients to, or partner with, a nanny payroll firm to provide this service.<\/p>\n

Paying nanny taxes yourself<\/h2>\n

With some time and effort, you can pay nanny taxes yourself<\/a>. The IRS estimates that it will take a family about 60 hours a year to manage nanny payroll and taxes on their own. That may only consider taxes and wages, not household employment labor laws such as domestic worker protections.<\/p>\n

If you\u2019re ready to take this on, here are seven steps to paying nanny taxes yourself.<\/p>\n

1. Obtain employer tax ids<\/h3>\n

Since you\u2019re now an employer, you need your tax IDs.<\/p>\n

You can apply online<\/a> for your Federal Employer Identification Number (EIN) on the IRS website. It only takes a few minutes.<\/p>\n

For your state ID, visit your state\u2019s tax agency website<\/a> for information on how to apply.<\/p>\n

2. File a new hire report<\/h3>\n

All employers \u2013 including families with household help \u2013 must file a new hire report with their state. You\u2019ll need to provide basic information about your employee, including name, address, Social Security number, and hire date. And your name, address, and EIN from the IRS. You may be able to complete a new hire report online with your state\u2019s tax agency.<\/p>\n

Federal law requires employers to file a new hire report within 20 days of hire, although some states require it sooner. The information is maintained in the National Directory of New Hires, which child support agencies use to locate a parent who owes child support and issue an income withholding order. It\u2019s also used to help prevent workers\u2019 compensation and unemployment fraud and reduce the cases of public assistance going to the wrong people.<\/p>\n

3. Calculate employee withholdings and employer taxes<\/h3>\n

Now that you\u2019re set up as an employer and your worker is on the job, the next step is to pay them properly and withhold the right amount of taxes.<\/p>\n

You can do this with the help of a nanny tax calculator<\/a>. With a nanny tax calculator, you can:<\/p>\n