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Cleaning up your nanny tax concerns

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in Small Business Tax

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 federal payroll taxes plus 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.

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{ 1 comment… read it below or add one }

Eric December 19, 2014 at 8:35 am

The threshold is remaining at $1,900 for 2015. Not sure where you got your $2,000 figure, but it’s incorrect.


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