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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 York, as in other states, the 'nanny tax' refers to federal tax obligations that apply to household employers. If a New York employer pays a domestic employee, such as a nanny, more than the federal threshold amount ($2,400 for tax year 2022), they are 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 York State also requires employers to pay state unemployment insurance taxes if they pay a domestic employee $500 or more in a calendar quarter. Employers are also required to withhold state and federal income taxes if both the employer and the employee agree to it. It is important for employers to keep accurate records of all payments and taxes as they may be required to provide their employee with a W-2 form and file the appropriate reports with tax agencies.

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Taxes

nanny tax

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Taxes

nanny tax

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