Considering the Nanny Tax when Choosing Childcare
you want to employ a nanny to work in your home, the nanny tax will be
something to consider. Hiring a nanny or any household employee makes you an
employer and as such, makes you subject to the taxing regulations and
responsibilities that govern household employers.
to the IRS, any nanny who follows your instructions, and who works in your home
with tools that you provide (toys, diapers, coloring books), should be taxed by
you. This is true even if your nanny works part-time for you and has other
employers. It is also true if she lives in your home and receives pay in part
through room and board. For these reasons, nannies are considered employees and
not independent contractors.
employers can expect the nanny tax to be about 10% of their nanny’s gross
salary. Fortunately, there are tax breaks that can help offset this cost.
families find the help of a nanny tax and payroll service invaluable. We
recommend www.GTM.com as a helpful and reliable nanny payroll and
tax service. As nanny payroll and tax specialists, they keep up to date on
regulations that affect you as a household employer and help ensure that you are
paying your nanny legally and withholding the proper taxes.
the hiring process, it is important to clarify from the get go if your nanny is
quoting her salary requirement in net (after taxes) or gross (before taxes)
terms. You can find a net to gross salary calculator at www.GTM.com.
Having a nanny tax and payroll service provider
like GTM Payroll Services to manage your nanny’s payroll and taxes can help
simplify the process of paying your nanny legally and complying with the tax
rules and regulations that govern household employers.
Learn more about the nanny tax with our helpful FAQ.