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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 Kentucky, as in all states, the 'nanny tax' refers to federal tax obligations that apply to individuals who employ household employees, such as nannies. If a Kentucky employer pays a nanny or other domestic employee $2,300 or more in 2021 (this threshold may change annually for inflation), the employer must withhold and pay Social Security and Medicare taxes. Additionally, if the total wages paid to the nanny exceed $1,000 in any calendar quarter, the employer is also responsible for paying federal unemployment tax under the Federal Unemployment Tax Act (FUTA). Kentucky employers must also comply with state employment tax requirements, which include withholding state income tax and paying state unemployment insurance taxes on behalf of their domestic employees. It is important for employers to keep accurate records of all payments and taxes, as failure to comply with these tax obligations can result in penalties and interest charges.

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Taxes

nanny tax

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Kentucky State Code

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Taxes

nanny tax