Nanny Tax Basics

What are Nanny Taxes?

Although commonly known as “nanny taxes” these employment taxes may apply to anyone you have working in your home. It doesn’t matter if the employee works full or part time, If you meet certain liability thresholds both you and your employee will have to pay these taxes. Read our FAQs section for much more about nanny taxes.

Nanny taxes paid by the employee:

Usually the employee taxes are deducted (withheld) from the employee’s paycheck and are paid to the government by the employer. If the employee earns at least $2,100 they will owe Social Security and Medicare taxes. They may also owe federal income tax, state income tax and in some locations they will owe local taxes. Some employers will cover the employee’s share of the taxes and this becomes part of the employee’s gross pay.

Nanny taxes are paid by the employer:

The employer will pay Social Security and Medicare taxes if the employee earns at least $2,100. They will also be liable for federal and state unemployment taxes if they pay over $1,000 in a quarter (in some states the threshold is lower).