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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 Wisconsin, as in other states, the 'nanny tax' refers to federal tax obligations that apply to individuals who employ household employees, such as nannies. If a household employer in Wisconsin pays their nanny or other domestic workers more than the threshold amount set by the Internal Revenue Service (IRS) for a given tax year ($2,300 for 2021, subject to change in subsequent years), they are required to pay Social Security and Medicare taxes. These taxes are often referred to collectively 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, Wisconsin employers must comply with state employment tax requirements, which include withholding state income tax and paying state unemployment insurance taxes if certain conditions are met. It is important for household employers to keep accurate records of payments and taxes, as they are required to provide their employees with a W-2 form and to file Schedule H with their federal tax return if they meet the IRS criteria for household employers.

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Taxes

nanny tax

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Taxes

nanny tax

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