How Do You Pay The Nanny Tax?
If you have a nanny or frequent babysitter for your child, you need to understand the nanny tax. The IRS requires anyone with household help, such as a babysitter or housekeeper, to pay Social Security and Medicare taxes if annual pay crosses a set threshold, which was $1,600 for 2008 and $1,700 for 2009, 2010 and 2011. So if you pay the same adult babysitter $35 every Saturday night, you must pay the nanny tax. Not only is it illegal to skip the nanny tax, it’s unfair to the person who’s caring for your child. You’re potentially costing her or him future Social Security and Medicare benefits by failing to honor the nanny tax.Difficulty: AverageTime Required: 3 to 5 hours to fill out Forms W-2 and W-3Here’s How: • When you hire a babysitter or other household
