Q. We are paying our housekeeper to watch our children. Do we have to pay an extra nanny tax? H.B., Bloomfield, Mich.
A. Not exactly. The “nanny tax” isn’t an extra tax. It’s merely the name given to the tax liability of people who employ household workers, such as housekeepers, whether or not they watch children. If the worker’s wages exceed a relatively low annual threshold, you’re responsible for paying the employer’s share of federalplus withholding the worker’s share of federal taxes. Note that you must also pay federal unemployment tax if the worker’s wages exceed $1,000 in a quarter.
Tip: The nanny tax threshold increases to $2,000 in 2015, up from $1,900 in 2014.
- Small Business Tax Deduction Strategies No matches