FAQ's - Frequently Asked Questions

What are nanny taxes?
When you hire someone to work in your home, the government considers you an employer. As an employer you are responsible for paying employment taxes. These employment taxes are commonly known as "nanny taxes" although they don’t only apply to nannies - they apply to anyone working in your home. There are two components of nanny taxes: the employer contribution and the employee withholding.

The employer contribution includes Social Security, Medicare, federal unemployment and state unemployment taxes. The employee withholding includes Social Security and Medicare and possibly federal, state and city income taxes.

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Why should I pay nanny taxes?
If you're thinking, "Why should I pay nanny taxes? No one else pays them and I'm not running for public office." There are three reasons you should pay nanny taxes:

It's the right thing to do – not only are you protected if audited, but your employee benefits from having Social Security and Medicare taxes paid. She will have a record of what she earned for the year which she will need when making a large purchase like a house or car or applying for college aid.

You can save money by paying nanny taxes. There are two strategies to reduce your nanny taxes: Flexible Spending Accounts and the Child and Dependent Care tax credit. See How can I save money by paying nanny taxes for more information.

The IRS will catch you. If you do not report your household employee’s wages and pay the associated taxes and you are audited, you will be subject to penalties and interest. See Can the IRS catch me if I haven't paid nanny taxes? for more information.

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Am I required to pay nanny taxes?
If you pay an employee working in your home $1,900 or more a year, you must pay Social Security and Medicare taxes.

If you pay an employee working in your home $1,000 or more per calendar quarter, you must pay federal and state unemployment taxes (some state have a lower threshold for unemployment liability).

See When do I pay nanny taxes? for more information.

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What are the nanny tax deadlines?
You must file your nanny taxes by the due date. If you file after that date, you may have to pay penalties and interest.

Jan 31

  • 4th Quarter State Unemployment Taxes
  • 4th Quarter State Income Tax Withholding
  • W-2 to Employee

Feb 28

  • W-2 and W-3 to Social Security Administration
  • State Income Tax Reconciliation

Apr 15

  • Schedule H filed with Federal 1040 to reconcile federal nanny taxes

Apr 30

  • 1st Quarter State Unemployment Taxes
  • 1st Quarter State Income Tax Withholding

Jul 31

  • 2nd Quarter State Unemployment Taxes
  • 2nd Quarter State Income Tax Withholding

Oct 31

  • 3rd Quarter State Unemployment Taxes
  • 3rd Quarter State Income Tax Withholding
* These dates apply to most household employers. Please check under States Served for your state's deadlines or call us for information about your state's deadlines.

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Are there any additional requirements for my state?

Select your state below to download a PDF of any specific requirements for that state. We are currently in the process of updating PDFs for any state that does not currently offer one.

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • California
  • Colorado
  • Connecticut
  • Delaware
  • District of Columbia
  • Florida
  • Georgia
  • Idaho
  • Illinois (view PDF)
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York (view PDF)
  • North Carolina
  • Oklahoma
  • Oregon
  • Rhode Island
  • South Carolina
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming

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How much do nanny taxes cost the employer?
Nanny taxes cost less than you think. Generally, the employer's contribution costs about 10% of the employee's salary*. The good news is that tax credits can offset some or all of this cost. See How can I save money by paying nanny taxes for more information.

* This estimate will vary based on actual salary, annual unemployment tax rates and wage caps for the state you live in.

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How do I know how much to pay my nanny?
The Nanny Tax Company will calculate how much you should pay your employee, whether you withhold the taxes from her gross pay or if you pay her taxes on top of her net (take home) pay.

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How can I save money by paying nanny taxes?
There are two strategies you may be able to use to minimize your nanny taxes. You can use a Flexible Spending Account offered by your employer or the Child and Dependent Care tax credit to reduce your nanny tax costs. These credits are only available to you if you pay your nanny taxes.

The Flexible Spending Account (FSA). You may be able to withhold pre-tax money from your paycheck in order to reimburse yourself for child and dependent care costs. With this option, you may reduce or completely offset your nanny tax costs! Check with your employer to see if they offer this benefit.

OR

The Child and Dependent Care tax credit. This is a credit that can reduce your federal income taxes but there are several tests you must pass in order to qualify for this credit.

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Can the IRS catch me if I havent paid nanny taxes?
YES. There are several ways you can be "caught" by the IRS.

  • If your employee files for unemployment benefits after her employment with you ends and you haven't paid your state unemployment taxes, the state unemployment office will fine and penalize you, and report you to the IRS.
  • If your employee becomes disabled, cannot work and files for social security disability benefits and you haven't paid your employee’s Social Security and Medicare taxes, the Social Security Administration will impose back taxes, interest and penalties.
  • If your employee files a tax return and includes the wages from your employment and you have not provided a W-2 to the employee, the IRS will fine and penalize you for the back taxes.
  • If both parents work and your tax return does not include available tax credits, the IRS may become suspicious and audit your tax return.
  • If your employee retires and applies for Social Security and Medicare benefits. If you haven't paid your employee’s Social Security and Medicare taxes, the Social Security Administration will impose back taxes, interest and penalties.

There is no statute of limitations for failing to report and pay federal payroll taxes.

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When do I pay my nanny taxes?
  • Federal nanny taxes (Social Security, Medicare, income taxes, and federal unemployment) are generally paid with your federal income taxes.
  • State nanny taxes (unemployment and income taxes) are generally paid quarterly although some states have monthly or annual filing requirements.
  • In addition, you must give your employee a W-2 by January 31 and file the W-2 and W-3 forms with the Social Security Administration by February 28.

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Am I required to withhold federal and state income taxes?
You are not required to withhold these taxes unless your employee asks you to and you agree. If you do not withhold income taxes, your employee must pay these taxes to the government herself so it is very important to discuss this with your employee during your salary negotiations.

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What are unemployment taxes?
Federal and state unemployment taxes fund unemployment benefits paid to workers who have lost their jobs. Each state has a different method for determining your unemployment taxes and tax rate. If you pay state unemployment taxes, you can get a credit toward federal unemployment taxes.

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What are the penalties if I file withholding taxes late?
The IRS and your state calculate penalties for late filings and late payments. Each state has a different schedule for penalties and interest. For example, Illinois imposes a minimum penalty of $50, plus 2% interest per month for late unemployment tax filing. Clearly, filing nanny taxes late can be very expensive.

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Do I have to pay my employee overtime?
Yes. Household employees are considered non-exempt employees and are covered by the Fair Labor Standards Act. Household employees must be paid for all hours worked and if they do not live with you, they are entitled to time and a half if they work more than 40 hours per week. If they live with you, they must be paid for all hours worked and depending on the state you live in, they may be eligible for overtime payment.

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I live in New York, do I have to pay my employee each week?
Yes as part of the New York Domestic Workers Bill of Rights, passed in November of 2010, you must pay your employee each week.

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I have a nanny on a trial basis. When do I have to start paying taxes?
If you employ someone, even on a trial basis, you become an employer as soon as they start working for you. All wages paid to this employee must be reported.

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Can I hire an illegal alien?
It is unlawful to employ a person who cannot legally work in the United States. When you hire a household employee, you and the employee must each complete part of the Form I-9, Employment Eligibility Verification. You must verify that the employee is either a U.S. citizen or an alien who can legally work in this Country. You must keep Form I-9 with your other employment records.

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I'm in a nanny share, how do the taxes work?
In a nanny share, each family becomes an employer and each pays taxes on the wages they pay to the employee. There are many things to consider when starting a nanny share including where to host, vacations, sick children and the employee’s compensation so it is best that both families and the employee address this in advance. Also, the “host” family should check with their insurance agent regarding liability and any other insurance related issues.

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I am a nanny, how do I pay my taxes?
Your employer is required to give you a form W2 by January 31st. This form will show your wages and any taxes withheld. You will use this form to file your income tax return.

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