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 Oklahoma, as in all 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 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 an employer pays a total of $1,000 or more in a calendar quarter to household employees, they must also pay federal unemployment tax (FUTA). Employers are required to file Schedule H with their federal tax return to report these taxes. It's important to note that these requirements are based on federal law, and while state tax obligations can vary, Oklahoma does not impose additional state-level 'nanny taxes'. However, employers in Oklahoma must adhere to state employment laws, including workers' compensation requirements and state unemployment taxes.