The Nanny Tax Guide: What Every Employer Should Know

ARTICLE | October 08, 2024

Authored by Vasquez + Company

Hiring domestic workers such as nannies and housekeepers comes with important tax obligations that many overlook. The article "Handle with Care: The Nanny Tax Rules" details the nuances of nanny taxes, including when you are required to pay Social Security, Medicare, and federal unemployment taxes. It also clarifies when a domestic worker qualifies as an employee versus an independent contractor, highlighting the potential risks of non-compliance.

Key Points:

• Tax Obligations: Generally, you must pay nanny taxes unless specific exemptions apply, such as payments under $2,700 or hiring casual help.
• Employee vs. Independent Contractor: Understanding the classification is crucial for tax purposes.
• Documentation: Keeping records and written agreements can protect you from future tax liabilities.

Ensure you comply with tax rules to avoid penalties, even years down the line. For comprehensive guidance, read the full article here.

Our firm provides the information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. This article is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.