Nanny Tax Year-End Planning

The end of the calendar year is quickly approaching, so it’s important that everything is in order to ensure there are no surprises when the time comes to pay the nanny tax. Year-end planning isn’t something to put off or ignore. It’s important to look at your finances and think about any changes you will be making for the rest of 2013 and into early 2014. Some things to consider include:

• Adding/decreasing your employee’s hours during the holiday season
• Awarding a year-end bonus
• Adjusting salary for 2014
• Vacation pay for the holiday season

Also note that for 2014, the domestic employee coverage threshold amount will increase from $1,800 to $1,900; this means that you are required to pay taxes if you pay a nanny at least $1,900 for the year.

Make sure you keep accurate records of any changes you make, along with any changes to any federal or state tax and wage laws. Please download our helpful “Year-End Checklist for Household Employers,” and contact the Household Employment Experts at GTM with any questions you might have.