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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 New Jersey, as in other states, the 'nanny tax' refers to federal tax obligations that apply to household employers. If a New Jersey resident hires a nanny and pays them more than the federal threshold amount ($2,400 for tax year 2022), the employer is responsible for paying Social Security and Medicare taxes, often referred to as FICA taxes. These taxes are 15.3% of cash wages, with the employer and employee each paying half, unless the employer chooses to pay the employee's share as well. Additionally, if the total wages paid to the nanny exceed $1,000 in any calendar quarter, the employer must also pay federal unemployment tax (FUTA). New Jersey also requires employers to pay state unemployment, disability, and family leave insurance taxes if the wages are over a certain amount. Employers must also withhold New Jersey state income tax from the nanny's wages if requested by the employee. It is important for household employers to keep accurate records of all payments and taxes, as they are required to provide their nanny with a W-2 form and to file Schedule H with their federal tax return. 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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Taxes

nanny tax

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