Q. We use a baby sitter to watch our children after school. Are we responsible for a nanny tax? S.B., Carlsbad, Calif.
A. Technically, if you employ a domestic worker who earns more than a specified amount during the year ($1,800 for 2013; $1,900 for 2014), you’re required to pay Social Security and Medicare taxes for that person. For 2013, the Social Security and Medicare tax rate is 7.65% on the first $113,700 of wages. For 2014, the 7.65% rate applies to the first $117,000 of wages. The domestic worker is also responsible for these taxes in the same amount. If you don’t withhold income tax from a nanny’s pay, the worker must make quarterly estimated tax payments.
Tip: Employing a domestic worker may also trigger taxes at the state level.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/37270/no-use-crying-over-nanny-tax "