New Client-Has Nanny

[zeros]

I have a new client that has hired a nanny. I must confess I know little about this. I assume the nanny is used for childcare. What would I be required to do? Do I fill out the schedule H? form 2441? Any thoughts would be appreciated.

[BOB W]

I have a new client that has hired a nanny. I must confess I know little about this. I assume the nanny is used for childcare. What would I be required to do? Do I fill out the schedule H? form 2441? Any thoughts would be appreciated.

To do it correct your client needs to register with his state Unemployment and State withholding agency. In other words, set up payroll and do withholding. Federal WH taxes are paid through EST tax payments (1040ES) on qrtly dates. Schedule H is completed at the end of the year with his tax return. Fed UI is also paid at that time, with 1040.

Your state may also require Workmans Comp and Disability insurance.

[zeros]

Taxes Paid by Client?

I assume the client would have to pay either 7.65% of the payroll or the whole 15.3%. Where is this deducted?

[S T]

Household

See TTB pag 1-5 and 14-1.

I have a client on Household Employment and we run regular payroll. We have a State Employment number and submit those payments quarterly, and then have the t/p set up on estimated payments for her taxes including the employment taxes. We then issue a W-2 at the end of the year.

So with the payroll, Employee (Household) pays their portion, and the t/p pays their portion of SE and Mcare, and we have FIT withholding and remits all through the Estimated payments and reports on Schedule H when we prepare taxes. . Your state laws may vary, the one I have is in Calif, so we remit the State Employment taxes each quarter.

[GIMoe]

Nanny or Au Pair?

I have a new client that has hired a nanny. I must confess I know little about this. I assume the nanny is used for childcare. What would I be required to do? Do I fill out the schedule H? form 2441? Any thoughts would be appreciated.

What is the residency status of your client's nanny? The answer to that question will determine how & what you have to file. If the nanny is an Au Pair here on a J-1 visa then you will not need a Schedule H or any SS/Med withholdings, etc..

http://www.irs.gov/businesses/small/international/article/0,,id=96420,00.html

[Lion]

Nanny Tax

The employer can also adjust other withholding instead of making ES payments. Around here, it's common for the household employer to pay both halves of the FICA/Medicare which results in grossing up the salary by the employee half that was paid on her behalf. It's also common for the nannies to NOT have income taxes withheld around here, but the salaries are getting so high that taxes and penalties/interest might be owed by the nanny when she files her return. The federal employer stuff gets settled up on Schedule H and Form 2441. Definitely contact your state for their requirements.

[businescares]

When a family is considering hiring a nanny, one of the main issues that must be taken into consideration is the salary that the nanny will receive. The amount of a nanny salary can depend on a range of factors, from the nanny's experience to the location in which the family lives. Nanny salaries, in general, will range from $275 to $800 weekly, with the range of $400 to $500 per week being most common, and $7 to $18 per hour.

http://www.daycaresurvey.com

[Lion]

Short Article

I have a superficial one-pager I wrote as talking points for a new mother who was interviewing potential nannies on my website:

http://DollarsSense.com

Newsletter page, Household Employer topic. It briefly covers federal issues, touches on CT, and lists a few IRS cites. The instructions for Schedule H are helpful.