FREQUENT QUESTIONS

• What are nanny taxes?
• Why should I pay nanny taxes?
• Who is required to pay nanny taxes?
• How much do nanny taxes cost you?
• How much do nanny taxes cost your employee?
• How can I save money by paying nanny taxes?
• How can the IRS catch me if I haven't paid nanny taxes?
• When do I pay nanny taxes?
• Am I required to withhold federal and state income taxes?
• What are unemployment taxes?
• What are the penalties involved with late filing of withholding taxes?
• Can I hire an illegal alien?
• Where do I get information about preparing nanny taxes myself?

• Late filing: for each whole or part month that a return is late, there is a penalty of 5% of the unpaid tax due with that return. The maximum penalty is 25%.
• Late payments: for each whole or part month the tax is late, a penalty of .5% of the amount of the tax generally applies. The maximum penalty is 25%.

Each state has different penalty schedules for late filing of income tax withholding and unemployment taxes. For example, Illinois imposes a minimum penalty of $50, plus 2% interest per month. The state of Connecticut charges either a $50 penalty or 10% of the unpaid taxes, whichever is higher. Clearly, filing nanny taxes late is very expensive.
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