{"id":629,"date":"2023-08-09T07:25:12","date_gmt":"2023-08-09T07:25:12","guid":{"rendered":"https:\/\/www.westevens.com\/blog\/?p=629"},"modified":"2023-08-08T21:51:23","modified_gmt":"2023-08-08T21:51:23","slug":"the-nanny-tax-what-to-do-if-you-have-household-employees","status":"publish","type":"post","link":"https:\/\/www.westevens.com\/blog\/the-nanny-tax-what-to-do-if-you-have-household-employees\/","title":{"rendered":"The \u201cNanny Tax\u201d: What To Do If You Have Household Employees"},"content":{"rendered":"

Who is a Household Employee?<\/strong>
\nThe “nanny tax” rules apply to you only if (1) you pay someone for household work and (2) that worker is your employee.<\/p>\n

A household employee is someone who does work in or around your home. Examples of household employees include babysitters, nannies, health aides, private nurses, maids, caretakers, yard workers, and similar domestic workers.<\/p>\n

A household worker is your employee if you can control not only what work is done, but how it is done. If the worker is your employee, it does not matter whether the work is full-time or part-time, or if you hired the worker through an agency or from a list provided by an agency or association. It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.<\/p>\n

On the other hand, if only the worker can control how the work is done, the worker is not your employee but is self-employed. A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business. If an agency provides the worker and controls what work is done and how it is done, the worker is not your employee.<\/p>\n

If you have a household employee, you may need to withhold and pay Social Security and Medicare taxes, or you may need to pay federal unemployment tax, or you may need to do both. To find out, read the table below.<\/p>\n\n\n\n\n\n
If you:<\/strong><\/td>\nThen you need to:<\/strong><\/td>\n<\/tr>\n
Pay cash wages of $2,600 or more in 2023 to any one household employee.<\/p>\n

Do not count wages you pay to:<\/p>\n

Your spouse,<\/p>\n

Your child under age 21,<\/p>\n

Your parent, or<\/p>\n

Any employee under age 18<\/td>\n

Withhold and pay Social Security and Medicare taxes.<\/p>\n

The combined taxes are generally 15.3% of cash wages.<\/p>\n

Your employee’s share is 7.65%.<\/p>\n

(You can choose to pay the employee’s share yourself and not withhold it.)<\/p>\n

Your share is 7.65%.<\/td>\n<\/tr>\n

 <\/p>\n

Pay total cash wages of $1,000 or more in any calendar quarter of 2022 or 2023 to household employees.<\/p>\n

Do not count wages you pay to:<\/p>\n

Your spouse,<\/p>\n

Your child under age 21, or<\/p>\n

Your parent.<\/td>\n

Pay federal unemployment tax.<\/p>\n

The tax is 6.0% of cash wages.<\/p>\n

Wages over $7,000 a year per employee are not taxed.<\/p>\n

You also may owe state unemployment tax.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Withholding the Employee\u2019s Share<\/strong><\/p>\n

You should withhold the employee’s share of Social Security and Medicare taxes if you expect to pay your household employee Social Security and Medicare wages of $2,600 or more in 2023. However, if you prefer to pay the employee’s share yourself; see “Not Withholding the Employee’s Share” in the next section.<\/p>\n

You may withhold the employee’s share of the taxes even if you are not sure your employee’s Social Security and Medicare wages will be $2,600 or more in 2023. If you withhold the taxes but then actually pay the employee less than $2,600 in Social Security and Medicare wages for the year, you should repay the employee.<\/p>\n

You pay withheld taxes as part of your regular income tax obligation. You don’t deposit them periodically subject to an exception for business owners. See “Payment Options for Business Employers” below.<\/p>\n

Withhold 7.65% (6.2% for Social Security tax and 1.45% for Medicare tax) from each payment of Social Security and Medicare wages. Wages exceeding the $200,000 (single filer) threshold amount are subject to the additional Medicare tax or 0.9%. Instead of paying this amount to your employee, you will pay the IRS 7.65% for your share of the taxes. Do not withhold any social security tax after your employee’s social security wages for the year reach $160,200 in 2023.<\/p>\n

If you make an error by withholding too little, you should withhold additional taxes from a later payment. If you withhold too much, you should repay the employee.<\/p>\n

There are a few other details that can be involved when having a household employee. For more insight and tax planning, call our office at (402) 932-8815.<\/p>\n

Sincerely,<\/p>\n

W. E. Stevens, P.C.<\/p>\n","protected":false},"excerpt":{"rendered":"

Who is a Household Employee? The “nanny tax” rules apply to you only if (1) you pay someone for household work and (2) that worker is your employee. A household employee is someone who does work in or<\/p>\n","protected":false},"author":2,"featured_media":630,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[11,13],"tags":[5,6,17,16,4],"_links":{"self":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts\/629"}],"collection":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/comments?post=629"}],"version-history":[{"count":6,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts\/629\/revisions"}],"predecessor-version":[{"id":636,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts\/629\/revisions\/636"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/media\/630"}],"wp:attachment":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/media?parent=629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/categories?post=629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/tags?post=629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}