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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 Massachusetts, 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 $2,300 or more in 2021 (this threshold may change annually for inflation), the employer is responsible for withholding and paying Social Security and Medicare taxes, often referred to as FICA taxes. Additionally, if an employer pays total wages of $1,000 or more in any calendar quarter to household employees, they must also pay federal unemployment tax (FUTA). Employers are required to report these taxes on their federal income tax return using Schedule H. In Massachusetts, employers may also be responsible for paying state unemployment insurance taxes if they pay wages of $1,500 or more in any calendar quarter or have a domestic employee for at least a portion of a day in each of 13 different weeks during the year. It is important for employers to keep accurate records of all payments and taxes as they are subject to the same reporting and withholding requirements as other types of employment.

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Taxes

nanny tax

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Taxes

nanny tax

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