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nanny tax

A nanny tax—also known as a household-employment tax—is not a legal term, but refers to a federal social security tax imposed on the employer of a domestic employee (such as a nanny) if the employer pays the employee more than a specified amount in total wages in a year.

In Colorado, as in other states, the 'nanny tax' refers to federal tax obligations that apply to individuals who employ household employees, such as nannies. If an employer pays a nanny or other household employee cash wages of $2,300 or more in 2022 (this threshold may change annually for inflation), the employer is required to withhold and pay Social Security and Medicare taxes. These taxes are often referred to as FICA taxes. Additionally, if an employer pays total cash wages of $1,000 or more in any calendar quarter to household employees, they must also pay federal unemployment tax (FUTA). Employers are responsible for reporting these wages annually on Schedule H (Form 1040) and issuing a W-2 form to the employee. It's important to note that these requirements are based on federal law, and specific state-level tax obligations may also apply. In Colorado, employers may also be required to pay state unemployment insurance taxes for their household employees. Employers should consult with an attorney or a tax professional to ensure compliance with all applicable tax laws.

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Taxes

nanny tax

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Taxes

nanny tax

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