This Is a TAX Question for Nannies Out There.

Updated on December 18, 2009
T.T. asks from Keller, TX
8 answers

My Speech Therapist has a Nanny who watches her two daughters once a week for $15 an hour! Yes over priced I know!!!!

They have paid her the full paycheck on each day.

The Nanny is trying to tell them that they the parents are responsible for paying her tax's as well....because she is an employee. She is also requesting a W2 form and a Tax ID number.

I told her that since she paid the nanny a full paycheck that the Nanny is responsible for paying her own tax's. Is she want them to pay the tax's for her that they the parents need to deduct the tax's from her paycheck. That they do not need a to give her a W2 form just a statement of what they paid her. Also she doenst need to provide a TAX ID number that their SS# will work just fine.

I cared for a little girl during the week in my home and this is how we did it. But I just wondered if it worked diffrently for Nannies who go to the Parents home.

Am I wrong in this? I would appriciate any help from any Nannies out there.

Also, she is looking for a replacement nanny for the NRH area. Daughters ages are 2 1/2 and 5 Years old...she only needs the help for one day posb 2.

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answers from Dallas on

I am a tax attorney. Most people do not handle nannies in the technically correct manner, so comparing your situation to others is not likely to give you a correct idea of how to handle it. It is different when you open your own home to children, in which case you are truly an independent contractor and the parents have no responsibility to withhold taxes or send you a W-2. If the parents want to get a child care credit on their return, they will be required to report the funds they paid to you on their tax return, along with your name, social security number or employer identification number. A nanny who works in the parent's home, however, is considered household help of the parent, and the parent is responsible for reporting wages paid if the nanny makes more than a certain amount, which I believe is $1,400 for 2007 and 2008 (you can find that on the IRS web site). If the nanny makes more than $1,400 from one household, that household is responsible for payment of the SOCIAL SECURITY TAXES of the nanny and reporting the wages to the IRS on a W-2. As the other person posted, the parent will have responsibility to pay state unemployment taxes if one quarter's payments to the nanny exceed $1,000. The parent can choose to withhold the employee's share of the social security (7.65% of gross pay) from the employee's pay; if the parent does not withhold it, then the parent still has to pay it to the IRS. Additionally, the parent must pay the employer's share of social security (7.65%-matches the employee's share). The parent IS NOT required to withhold federal income taxes, but the nanny can request that those taxes be withheld. If the nanny requests that income tax be withheld, then obviously she would not collect the entire $15 per hour (and yes that is a very high salary). I normally negotiate all these kinds of issues before employment starts so there is no misunderstanding about the pay. The fact that a nanny gets a job through an agency rarely has any effect on the parties' liability for employment taxes; generally the nanny agency just performs a referral service and the salary, taxes, etc. are up to the parent and the Nanny. I suggest that your friend discuss the issue with the parents and the parents should discuss it with their accountant. good luck.

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answers from Dallas on

I am a Nanny as well for different families through an agency which means you are self-employeed so in that note it is the nanny's responsibility to file for her own taxes.
Your friend might want to ask an accountant.
Good Luck



answers from Dallas on

I have a nanny that I pay "nanny taxes" for, so I can probably provide a little direction. First, it sounds like there was no written agreement between the nanny and your friend? And did they ever discuss the tax issue when the nanny was first hired? At that time, they should have agreed how the nanny would be paid (under the table, thus no tax obligations, or legitimately).

All the same, your friend is an employer and, as such, is required to pay the employer portion of Federal taxes/SS/Medicare and Texas Unemployment taxes. This is in addition to the wages. What is optional is for the employer to also pay the employee's portion of the taxes. In this case, since your friend paid the nanny gross wages, then the nanny is responsible for reporting her portion of the taxes, but your friend is still obligated to pay the employer's portion of the taxes, then issue a W-2 to the nanny. And your friend will require an employer ID number . . . SSN will not work. And then your friend needs to report the nanny taxes on her own income tax return.

I got advice from a tax advisor, because it was all rather confusing at first. I highly recommend your friend do the same. I will bet the nanny is wanting things done legitimately because she wants to get her IRS rebate, which she won't get if she doesn't file a tax return.



answers from Portland on

First please note that $15 is not "over priced" depending on the area, job duties, and/or nanny's experience. I throw this out as I felt that this statement justified the parents not needing to pay anymore money out of pocket (taxes)

Second, as others have mentioned A nanny is an employee.She is not asking for her taxes to be paid, only the employer's share including they should have worker's comp and Fica. It is her choice and responsiblity to pay her personal taxes owed by "tax day" in April.



answers from Dallas on

There is a big difference between a nanny and an occasional babysitter in the eyes of the IRS. The IRS website offers great tools and literature to better understand both the nanny and parents responsibilities regarding taxes.



answers from Dallas on

If she paid the nanny over $1000 during the tax year, she is actually responsible for certain employer side taxes. Additionally, she may be responsible for unemployment taxes. However, as long as she did not withhold employee side taxes, I believe they remain the employee's responsibility.

Although I am not certain, I believe that she also needs to apply for an EIN (it is not difficult to obtain one) and to issue a W2 to the nanny.



answers from Dallas on

I was a nanny for 7 years. The family withheld taxes from my weekly paycheck. I was an employee. I had sick days, paid vacation, health insurance, etc. When I babysat for families on occasion, I was responsible for the taxes because it was considered contract labor.



answers from Dallas on has a great FAQ page to answer these types of questions.

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