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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 Vermont, as in other states, the 'nanny tax' refers to federal tax obligations that apply to household employers. If a Vermont resident hires 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 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 a calendar quarter. Additionally, Vermont employers must comply with state employment tax requirements, which include withholding and paying state unemployment insurance taxes and carrying workers' compensation insurance if applicable. 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 Vermont Department of Taxes. Employers should consult with an attorney or a tax professional to ensure they meet all federal and state tax obligations.

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Taxes

nanny tax

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Taxes

nanny tax

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