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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 Maine, as in other states, the 'nanny tax' refers to federal tax obligations that apply to individuals who employ household employees, such as nannies. If a household employer in Maine pays their nanny or other domestic workers more than the federal threshold amount ($2,300 for tax year 2021, subject to annual adjustments for inflation), they are required to pay Social Security and Medicare taxes. These taxes are often referred to as 'FICA' taxes. The employer is responsible for withholding the employee's share of these taxes and also paying the employer's share. Additionally, if the total wages paid to a nanny exceed $1,000 in any calendar quarter, the employer must also pay federal unemployment tax (FUTA). Maine employers must also comply with any applicable state employment tax requirements, including state unemployment insurance taxes. It is important for household employers to keep accurate records of wages paid and taxes withheld and to file the appropriate federal and state tax forms on time.

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Taxes

nanny tax

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Maine State Code

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Taxes

nanny tax

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