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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 Rhode Island, as in all states, the 'nanny tax' refers to federal tax obligations that apply to household employers. If a Rhode Island resident employs a nanny and pays them more than the federal threshold amount, which is $2,300 for tax year 2021 and may be adjusted for inflation in subsequent years, the employer is responsible for paying Social Security and Medicare taxes. These taxes are often referred to as 'FICA' taxes. The employer may also be responsible for paying federal unemployment tax (FUTA) if they pay wages of $1,000 or more in any calendar quarter. Additionally, Rhode Island employers must comply with state employment tax requirements, which include withholding state income taxes and paying state unemployment insurance taxes if certain thresholds are met. It's important for employers to keep accurate records of all payments and taxes, as they will need to report this information to the IRS and the Rhode Island Division of Taxation.

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Taxes

nanny tax

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Taxes

nanny tax

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