Don’t Overlook The “Nanny Tax”

Posted on Friday, January 03, 2014

As you review your filing requirements for 2013, make sure you don't overlook the so-called "nanny tax." If you have a household employee, you could be liable to pay state and federal payroll taxes.

First, you must determine whether you have a household employee. Generally, this is someone you hire to work in or around your house. It could be a babysitter, nurse, maid, housekeeper, or gardener. It doesn't matter whether they work part-time or full-time, or whether you pay them hourly, weekly, or by the job.

But not everyone who works around your house is an employee. For example, if a lawn service sends someone to cut your grass each week, that person is not your employee. As a general rule, workers who bring their own tools, do work for multiple customers, or control when and how they do the work, are not your household employees.

If you have a household employee, you'll generally be responsible for 2013 payroll taxes if you paid that individual more than $1,800 last year. However, federal unemployment tax kicks in if you pay more than $1,000 to all domestic employees in any quarter.

It's not always easy to tell whether you have a household employee, or whether exceptions apply. If in doubt, don't hesitate to contact our office.

Posted in Tax And Accounting Topics For Business

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

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