Nanny Salaries & Taxes Tips

Read these 45 Nanny Salaries & Taxes Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Nanny tips and hundreds of other topics.

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What kinds of things should I consider adding to the nanny contract?

Preparing to Write the Nanny Contract

Nanny positions come with certain expectations; namely, a decent wage and a respectful environment to work in. Before hiring a nanny, take into consideration the impact it will have on your home. The nanny you hire is going to be in your home every day, going about the business of serious childcare. However, as part of the household, she's going to have access to personal, private, and confidential information. Will your nanny share that information with the neighborhood, or will she be sworn to secrecy?

Certain things like confidentiality agreements can be worked into the nanny contract. The same holds true with nanny salaries. Thinking about these things should happen before sitting down to work out the details of any nanny contract. It's impossible to envision every possible scenario and work it into a nanny contract. It's not like you can ask the Magic 8 Ball either. All it will tell you is, “All signs point to yes,” or, “Cannot predict now.” That's not much help!

To get your mind thinking about what you might want to include in your nanny contract, ask yourself the following questions:

1) What's the highest nanny salary I can pay?

2) Do I want to consider working out a nanny share option with someone else in the neighborhood?

3) What specific job duties will I expect the nanny to do on a daily basis?

4) How many hours per week will I expect the nanny to work?

5) Will I offer any benefits, in addition to the nanny salary?

6) Will the nanny have use of the family car?

7) Will the nanny be allowed to use the family phone, have guests over during working hours, or take the children on visits across town?

8) Will there be a confidentiality clause in the contract?

Hopefully, your mind is officially in nanny contract mode now. There's a lot to it and it's always those little things that sneak up on you.

Is my neighbor crazy or was she serious about wanting to share my nanny?

Share My Nanny You Say?

If someone suggests sharing your nanny, do not:

  • Wack them across the face with the back of your hand;
  • Assume they want you to continue paying the nanny salary while they benefit from the services;
  • Laugh,
  • Cry,
  • Say, “What nanny? I don't have a nanny. I don't know what you're talking about.”
A nanny share situation is actually a good way for you to save money. Got your interest now? Like anything, there's always a benefit to pooling your resources. Nanny sharing is no exception. This is how it works:

  • Two families get together and decide that the nanny could work out of one home, while taking care of two family's children.
  • The end.
Collectively, the two families would pay the nanny salary which would have to be a little higher than if she were only working for one family. However, when you divide that nanny salary in half, with both families paying their portion, you still end up paying less than you normally would. Now, don't just assume your nanny is going to be interested in this. It's one thing if you haven't hired her yet. She'll have the option to take the job or decline once she finds out the details. If it's a nanny already working for you, discuss the idea with her. Both families and the nanny should sit down together to discuss the pros, cons, and nanny salary renegotiation.

What will happen if I don't file nanny tax returns?

The Price Of Not Filing Nanny Tax Returns

Everybody knows you have to pay your taxes, and the majority of law abiding citizens do what they can to uphold the law. But when it comes to a typical nanny salary, many families don't realize their requirements to withhold certain deductions like unemployment insurance, disability insurance, social security, or Medicare. Tax requirements come into play when the nanny pay scale exceeds $1,100 annually (social security and Medicare), or, for federal unemployment tax, when the nanny pay scale exceeds more than $1,000 in a calendar quarter.

At first, it might seem easier to simply offer nanny pay under the table. Unfortunately, most cash-only deals end up causing more problems than they solve. For one thing, you might go years without getting caught, but if at some point one of your future nannies applied for unemployment insurance, or something similar, the fact that there's no paper trail is going to raise a few eyebrows. Watch out if that happens and hang onto your wallet! The fines and penalties (plus interest) could add up to thousands more dollars than you would have paid had you filed your nanny tax forms right from the start.

The bottom line: Don't be overwhelmed by the prospect of filing nanny taxes. There are all kinds of resources including specialized nanny accountants, nanny software for figuring out related tax returns, nanny tax calculators, and even specific agencies to help with your nanny tax deductions. Don't be concerned about the extra costs of correctly filing nanny tax forms, be concerned about the penalties and fines of not filing your taxes!

What things should I consider when deciding what to pay my live-in nanny?

Estimating Live-In Nanny Pay

There are a lot of things to be considered when estimating a live-in nanny pay scale. Generally, a live-in nanny makes more money for the simple reason that she has more responsibilities. Although it's hard to nail down exact numbers, the average nanny salary ranges anywhere from $250/week upwards of $650/week. It could even be a little more than that, or a little less. The range is huge and depends a lot on where you live, the nanny's work experience, education. If you're in the position of hiring a live in nanny, use some of the following guidelines to estimate the nanny payroll:

1) Hours of work. Will you be paying your nanny to work a few extra hours per day? With the nanny living in the house, she won't have to battle traffic jams or poor weather conditions to get to your house. For that reason, she could be making breakfast and getting the kids ready for school while you're getting ready for work.

2) When figuring out how much to pay a nanny, factor in the unofficial “on call” status of the live in nanny. With your nanny living under your roof, it might be easy to call on her more often to baby sit the children or pitch in around the house during off hours. Those off time or “overtime” hours will have to be compensated and accounted for.

3) The “away from home” factor. If your live-in nanny is relocating from away, you may want to consider factoring in bonuses or benefits like plane tickets as part of the nanny pay scale package.

Whatever you decide to pay your nanny, make sure to draw up a contract, allow her time to read it over thoroughly, make revisions if necessary, and have it signed. A live-in nanny pay scale should take into account a number of things, but ultimately should be fair.

What nanny tax forms and related information should I keep in my filing system?

Keeping Track Of Nanny Tax Forms

If you don't already have one, go out and buy a fire-proof filing cabinet that comes with a lock and key. If you've hired a nanny, you're now the employer and you're going to have to keep copies of all your income tax records. Before you try to sort file folders by subject, you need to know what exactly you should be keeping copies of. The following is a list of forms and documents you should be keeping track of:

1) Copies of Schedule H (form 1040), which is for Household Income Taxes.

2) Related forms like W-2, W-3, W-4, and W-5.

3) Keep supporting records for the above mentioned nanny tax forms. This might include receipts, invoices, statements, etc.

4) A copy of the signed nanny work agreement.

5) Receipts for expenses directly related to housing a nanny (if she's a live-in nanny). This might include copies of your electric bill, phone bill, water bill, grocery bills, etc. Depending on where you live, you may be able to claim deductions for some of these. Check with the IRS for more information.

6) Keep a record of your nanny's social insurance number, name, address, and any other pertinent information, including (if necessary) a copy of her work visa.

The first step in complying with nanny tax deductions is setting up a filing system to keep everything in order. Keep your documents well organized and in a safe place. When it comes time to submit those nanny taxes, you won't be scrambling to find all of the paperwork.

Where do I start to find information on nanny income tax?

Getting Past The Murky Waters Of Nanny Income Tax

Hiring a nanny is nothing like hiring an occasional babysitter to watch your kids while you go out to dinner and a movie. At least it's not the same in terms of taxable wages. A babysitter who is called in from time to time is technically employed by you, but you're probably not paying them enough to contribute to Medicare, social security, or unemployment insurance. The plot thickens and becomes more complicated when it comes to deciphering nanny income tax.

If you're hiring a nanny for the first time, or if you've had someone on your nanny payroll, there are a few things you need to do in order to comply with federal nanny tax legislation:

1) Recognize that you don't have to be an accountant or a tax expert to figure this out. Your first resource should be the IRS when looking for information on nanny income tax legislation as it related to your state.

2) Claiming and submitting income tax deductions for your nanny might open doors to enable you to claim certain expenses like child care credits.

3) You'll need to report all household employment taxes with your 1040 and file Schedule H with your income tax return.

4) Use an online nanny tax calculator to help you figure out the deductions.

5) Seek input from an accountant if you're having difficulty. A qualified accountant can help you make the most of your tax returns, while complying with current nanny tax deductions.

The best idea is to seek professional guidance from an accountant based on your personal situation. A lot of things like the amount of nanny salary you pay, where you live, whether your nanny lives with you or not, and the types of tax credits you can apply for all affect the paperwork involved. The good news is that once you've figured out how to comply with federal nanny income tax regulations, the process should remain the same for you from year to year. The forms required might change, but once you've got it figured out, it should get a lot easier with time.


Nanny Agencies and Payroll Taxes

Nannies4Hire Tip: Some employers prefer paying a nanny agency for a nanny's services. If this occurs, nanny agencies are then responsible for paying nanny taxes.

How do I know when to ask an employer for money?

Earning What Your Worth in a Nanny Position

So, you've graduated from college or university and you're ready to pound the proverbial payment. It's time to start applying for nanny positions and you're as prepared as you can be. You've got your updated (error-free) resume, references, an awesome attitude, and a love for kids. Being the smart cookie that you are, you probably have a nanny salary range in mind. You've researched the local area and you feel that you're worth whatever dollar figure you have in mind.

Of course you're worth the nanny salary! However, in some situations you might even be worth a lot more. For example, if you've applied for nanny positions, landed some interviews, and finally signed on the dotted line to work with a family who have children with disabilities, you're in for a lot more work and responsibility than originally planned. Any nanny positions that require above-and-beyond supervision, mobility assistance (i.e. taking children in and out of vehicles with wheelchairs), or special menu planning, should come with higher pay.

When you go out into the world, keep these things in mind. Any good interviewer will give you a chance to ask some questions of your own, so don't be shy. Ask about the children and their day-to-day requirements. Will you be required to look after pets, other people within the home, etc.? Remember, extra responsibilities should always equal extra pay.

What nanny payroll taxes are you required to pay?

Required Nanny Payroll Taxes

Employers who pay their nannies more than $1500 per year are required by the federal government to pay taxes on that person. Payroll taxes consist of the following items:

  1. Social Security-You must match the 6.2% of Social Security tax that is paid by the nanny for up to $94,200.
  2. Medicare-You must match the 1.45% of Medicare tax that is paid by the nanny with no limit or stipulations on wage amounts paid.
  3. Federal Unemployment Taxes-You must pay a net tax of 0.08% for your nanny. This is based on you paying 6.2% taxes on the first $7000 and then you receiving a tax credit of 5.4% after that amount has been reached.
  4. State Employment and Disability Taxes-You will need to check with your state's tax department for recommendations on how much to withhold.

What's a fair nanny pay scale?

Creating A Nanny Pay Scale

If you were a corporate executive hiring someone for the first time, would you start the person out at the top of the pay scale? Probably not. The same holds true when hiring a nanny. Unless you know that nanny really well and feel confident in starting her at the top of your pay scale, it's best to start at a place that she can build on.

Nanny pay should gradually increase as your confidence does. When you're creating the nanny contract, make sure to mention the nanny pay scale including the requirements to get to the first pay scale step to the last. When creating a nanny work contract, there's no need to go into details about the average nanny pay for your geographical area. The important thing is to be specific about what you plan on paying her, and how she can expect to receive regular pay increments. The contract should specify a timeline indicating when the contract will be revisited and the rewards for a job well done. For example, you might offer quarterly salary increments based on satisfactory job performance. What that means and how you, as the employer, define “satisfactory” is up to you.

Whatever you use as a nanny pay scale, make it fair, justifiable, and relative to what others are paying their nannies (for similar job responsibilities) in your area.

Do I pay the taxes on my nanny or does the nanny agency?

Nanny Agencies and Payroll Taxes

In some cases, a nanny's employment is handled through a nanny agency. Nanny agencies may be responsible for issuing paychecks to their nannies. In this case, the families are responsible for paying the nanny agencies. Then, the agencies are responsible for paying the nanny payroll tax. However, if you do not pay a nanny agency directly for your nanny, you are responsible for paying nanny taxes, including Social Security, Medicare, federal unemployment, and state employment and disability.

How are FICA and FUTA paid for nannies?

Paying FICA and FUTA for Nannies

FICA and FUTA nanny taxes should be a part of every employer's tax liability. The Household Employment Tax form, which is Schedule H, allows an employer to report and calculate both of these nanny taxes. Once the taxes are calculated, the numbers can be put on the 1040 tax form, and Schedule H is also filed with the tax return. For those who choose not to withhold taxes from nannies' wages, they must add 7.65% to a nanny's taxable income. If you still aren't sure about the exact amount of nanny taxes to be paid, you may want to consult your accountant or a reputable tax service for help. If you fail to pay the adequate amount of nanny taxes, you could be charged an interest penalty.

What are the FICA nanny tax rules?

FICA Nanny Tax Rules

The FICA nanny tax rule involves 15.3% of a nanny's wages. This percentage should be divided up between the nanny and the employer, with each one paying half or 7.65% of the total amount. The half which the nanny is responsible for paying can be paid one of two ways.

  1. An employer can withhold the nanny's 7.65% tax from her paycheck. This is the same method an employer uses for his or her employees.
  2. In most cases involving domestic help, however, the employer may pay the nanny in cash without withholding any of the nanny tax. If this is the case, you are responsible for paying the entire 15.3%.

What is a nanny tax calculator?

Nanny Tax Calculator

You can access several nanny tax calculators on-line. These tax calculators will help you determine how much tax you should pay the federal government for your nanny's employment. You must pay nanny taxes on any amount over $1500 that you pay your nanny per one calendar year. Nanny tax calculators typically require the following information:

  1. Pay Date
  2. Weekly Gross Wages-Amount paid nannies per week before taxes are withheld.
  3. Pay Schedule-How often will your nanny be paid.?
  4. Nanny Withholding Rate-Single or married withholding at the higher single rate or married.
  5. Withholding Federal Income Tax-Answer yes or no.
  6. Withholding State Income Tax-Answer yes or no.
  7. State of residence.

How should I go about estimated an average nanny salary?

Estimating An Honest Nanny Salary

There's no right or wrong amount to pay a nanny. In fact, the nanny pay scale varies from household to household and from state to state. If you're interesting in hiring a nanny, you might be scratching your head trying to figure out the average nanny pay when really there is no such thing. A quick Internet search will itemize more lists and suggested salaries than you could ever imagine. It might just confuse you even more. By following a few simple guidelines on nanny rates, you'll easily be able to determine a reasonable nanny salary based on what you can afford, and what the nanny deserves.

When estimating the nanny salary, take into consideration the following:

1) Start by writing down a weekly or bi-weekly pay scale (your choice) of $250, $350, $450, $550, and $650. Take a piece of paper and write the figures down across the top.

2) Down the side of the page, list all of the nanny's employability skills and experience. This will help you determine how much to pay a nanny based on concrete facts.

3) Now, start assigning a dollar figure to every skill. For example, if she's only worked as a nanny for six months before, put that under the low-end of the pay scale.

4) Keep doing that until you've assigned a monetary value for each employability skill.

5) Now, add up all of the figures and take an average of that total

Does that look like a reasonable bi-weekly or weekly nanny salary to you? It may be too high, or too low, depending on how you've assessed the factors. It's okay to go ahead and tweak the numbers. You can always define (based on that average nanny salary you've just calculated) a low and high end of the scale. That way, you start the nanny on the lower end of the pay scale, increasing in increments the longer she works for you.

What are fair wages for a nanny salary?

Various Nanny Wages

A nanny salary (not taking in account nanny tax) for 18 to 20 years old with less than 2 years child care experience is US $275-$350 live-in and $8 to $10 hour live-out. 21 years or older with 2 years child care experience is US $350-$500 live-in and $8-15 hour live-out. Two or more years of nanny experience and/or a college degree in a child related field is US $400-700 live-in and US $9-15 hour live-out.

Where do I find information about preparing nanny taxes?

Preparing Nanny Taxes

If you have decided to do the taxes for the nanny salary, consult IRS publications 926 and 15. These explain the federal laws and tax forms. IRS estimates it takes 8 hours to complete federal nanny tax forms. Also contact your state revenue department for information about the state income tax laws and forms. Finally, you should contact your state department of unemployment regarding their filing requirements for nanny taxes.

How do I calculate nanny tax?

Calculating Nanny Taxes

To give your a nanny salary you need the following - weekly gross wages, pay frequency, withholding rate (single or married) and withholding allowances. For completion of your nanny tax figure in if there will be Federal and State taxes taken out. You might want to consider hiring a personal tax advisor to handle all of your questions regarding your nanny taxes. There are also online programs that will help you calculate the amount of money that you need to with hold from your nanny's paycheck.

How much do nanny taxes cost you?

Average Cost of Nanny Tax

Nanny taxes cost less than you think. The employer's nanny tax cost about 10% of the employee's salary. For example, a nanny salary with earnings of $350 per week would cost $35 per week. The good news is that tax credits can offset this cost.

How can I find a New Jersey nanny?

New Jersey Nanny

A New Jersey nanny will often register with one of several available nanny agencies on-line or in their local New Jersey area. Registering with a nanny agency will allow a New Jersey nanny to fill out an application profile and list the type of work in which she is interested in. Nanny agencies typically represent live in nannies, live out nannies, au pairs, and part time nannies. A nanny can specify what type of employment she expressly needs, and families can then look through the nanny agency's database, searching for nannies that fit their prerequisite requirements. Once an initial match has been made, the family will set up an interview with a New Jersey nanny and, if satisfied, continue with the hiring process.

How much do nanny taxes cost your employee?

Nanny Tax Cost for Employees

Most of the time, a single nanny with no children will take home about 80% of her gross nanny tax earnings. For example, a nanny salary with earnings of $350 per week would clear about $280 after taxes. The specific nanny taxes withheld from the employee's wages vary based on the employee's marital status and number of dependents.

What is the FUTA nanny tax rule?

FUTA Nanny Tax Rules

The FUTA nanny tax isn't as expensive as the FICA tax. Generally, FUTA is required based on the first $7000 of a nanny's wages for a year. This rule applies, however, only if you pay $1000 or more in wages in any calendar quarter of the current or previous year. This nanny tax rule only applies to nannies who aren't your parent, spouse, or your under-the-age of twenty-one child. It is important that you pay your state unemployment tax by April 15 each year. In doing so, your nanny's FUTA will typically only be 0.08%. However, for anyone who fails to pay the state unemployment tax, the FUTA for nannies is 6.2% of their wages.

Why should I pay nanny taxes?

Paying Nanny Tax

There are two strategies to reduce your nanny taxes: Flexible Spending Accounts and Dependent Care Tax Credits. Finally, if you don't pay the tax the IRS will catch you. Your income tax return asks "Did you pay anyone working in your home $1,300 or more?" If you mark off yes because you pay a nanny salary, the IRS will look for your nanny tax payments. If you say no, you compromise your federal income tax return and may be audited.

What should I look for in a Virginia nanny?

Virginia Nanny Agencies

A family who wishes to employ a Virginia nanny should keep the following points in mind before beginning the hiring process. These points should be addressed in a nanny contract as well to protect the interests of the family and the nanny. Each party should be given a copy of the signed agreement before the Virginia nanny begins her new job.

  1. Hours of Employment-Will the Virginia nanny be full or part time, live in or live out?
  2. Salary-Keep in mind that employers are required to pay a nanny tax on any salary over $1500 in a calendar year.
  3. Duties-Will her duties include light housekeeping?
  4. Benefits-Will you provide insurance, paid vacation leave, paid holidays, sick days, and a car?
  5. Overtime-How will overtime pay be handled?
  6. Living arrangements-If the Virginia nanny is a live in nanny, what living accommodations will you provide for her?

Is there software available?

Software for Nanny Taxes

Nanny Taxes are a fact of life for household employers. Take the chore out of complying with nanny tax laws by using a tax software payroll program designed specifically for the employer. It calculates all federal and state withholding taxes for the current tax year for the nanny salary as well as print pay stubs and liability reports. The software will even print your payroll data directly on W-2 forms, making your year end tax reporting obligations a breeze.

What is a nanny tax?

What is a Nanny Tax?

A nanny tax is defined as the tax you will pay to the federal government to nannies. Nannies are considered household employees, just like a gardener, housekeeper, or other person in your employ would be. Therefore, you must pay taxes on this person, and this is a federal requirement. You must pay a nanny tax if you pay your nanny more than $1500 in a calendar year. However, if you pay a nanny less than $1500 in one calendar year, you are not required to pay a nanny payroll tax.

How can having too many nanny positions look bad on my resume?

The Negative Connotations of Having Too Much Nanny Work Experience

If you've worked several nanny positions over the years, don't be surprised if you find yourself explaining the reasons behind all the jobs. To you, having a lot of nanny positions under your belt looks like an accomplishment. After all, look at all the experience you've accumulated! Every family brings different challenges and different opportunities to learn and grow. Now, think of it from the hiring family's point of view. They look at your lengthy resume and ask themselves, “What's wrong with this person that she's gone through so many jobs?”

Families advertising for nanny positions are probably going to be hyper-critical when choosing a nanny. It's not the same as hiring someone to mow your lawn, or paint your house. Families need to know they're not hiring Auntie Axe Murderer to watch over their kids. Everyone has seen one too many episodes of America 's Most Wanted. You can't blame parents for being very cautious. To you, listing the last 15 places you worked as a nanny seems like a strength, but to the family….not so much.

So, when applying for nanny positions, turn some critical awareness onto yourself. Tweak your resume and list the last two or three positions you've worked. List references (make sure you ask the people you list if they will give you a good reference) and have a very good answer for the inevitable nanny interview question: “Why did you leave your last position?”

Does my appearance make a difference when applying for nanny positions?

It's All About Your Image When Applying For Nanny Positions

You don't have to have a Master's Degree in Child Psychology to work as a nanny; however, most nanny positions require at least some experience working with children. If you can combine that experience with recent and relevant training like first aid, CPR, and maybe even some continuing education courses related to childcare, you'll be more likely to land a nanny job.

When applying for nanny positions, always put your best face forward – literally. If you're submitting photos to an online nanny placement agency, make sure it's not the photo of you last Saturday night just before you went out to the bars. Don't be offended! Your picture probably looks great, but take a look at it with a critical eye. Chances are the way you dress, do your hair, and apply your makeup to go out on a Saturday night is nothing like the way you'd get ready for a day's work as a nanny. Of course, you know that. But the family looking to add someone to the nanny payroll doesn't. The first photograph they see is going to paint a picture of who you are. It might not be fair, but it's reality.

If your resume is primped and primed, and your image conveys the kind of trustworthy, competent nanny that you are, you won't have any trouble finding a job as a nanny.

What's the best way to find out exactly what I can and can't claim in childcare expenses?

Getting to the Source of Accurate Nanny Tax Information

Some people would rather not pay someone else to do something that they could do themselves, like filing income tax. Hey, there's nothing wrong with that. Just make sure to do your research, make sure you've got the proper income tax forms, and most important, the right information.

Ever notice how when you ask ten different people the same question, you get ten different answers? You don't want that to happen when you're trying to figure out nanny taxes, nanny payroll issues, or how much you can claim for childcare expenses. There could be variances from state to state, and a wide variety of situations that fit into different IRS categories. The best way to make sure you're getting the most accurate, up-to-date information is by visiting the IRS website.

The IRS website is an easy tool to use for finding the correct income tax forms you need, complete with explanations on why you may or may not really need those forms. There are some great articles on child care claims that include information on what you can claim and what you can't, depending on your life circumstances.

Get some toothpicks for your eyelids…reading the IRS website is a little dry. It will, however, help you find out exactly what you need to know about nanny taxes and claiming nanny expenses.

Do I have to pay nanny taxes?

Paying the Nanny Tax Man

If you employ a full or part-time nanny to work in your home, you're obligated to withhold and submit tax deductions from the nanny salary. It's one thing to hire an occasional babysitter, but if you're paying a wage for someone to work in your home, you're responsible for the tax deductions.

The nanny tax actually encompasses three other types of federal employment taxes including Social Security, Medicare, and federal unemployment. In addition, there are state unemployment taxes that need to be paid. Yes, it can be confusing, especially if you're not the “accountant type”. Luckily, there are lots of services available for people who want to correctly claim any taxes owing without risk of penalty. If you normally hire an accountant to do your annual taxes, there's no reason why you can't add this to the paper pile. On the other hand, if you've always managed to do your own taxes but suddenly aren't feeling too confident about doing the nanny taxes, it might be time to consider hiring an accountant.

The important thing is to be aware that nanny taxes are a must and there are no shortcuts. If you don't know what you're doing, hire a professional. Overtime, you'll start to accumulate more and more knowledge about the way nanny taxes work. As you become more comfortable with the idea, you may even decide to give it a try on your own. Remember, there's always help, all you have to do is ask.

How do I set up direct payroll deposit for my nanny?

Setting Up Direct Deposit For Nanny Pay

After figuring out exactly what you want to pay your nanny, your next question should be how to pay your nanny. Since you're going to be making nanny tax deductions from the nanny pay, cutting checks is the most efficient payment option. But the question really isn't about whether to write a check or not; the question is whether to offer it hand-to-hand come payday, or setup a direct deposit bank account for the nanny.

If you're only paying a nanny who works for you on a casual basis, setting up a direct deposit system probably isn't necessary. However, a full time nanny might appreciate the convenience of having her checks directly deposited into her bank account. If that's the case, there are a few things you need to do to get the system set up.

1) Ask the nanny to open a bank account at the institution of her choice if she doesn't already have one.

2) Ask the nanny to provide you with a voided check. You'll need the account and routing number in order to set up direct deposit.

3) You'll need to invest in some sort of nanny (payroll) software in order to access online direct payments.

4) If you need help getting the system setup, you might have the option of contacting the support contacts listed with the nanny software, or try contacting the bank for information on setting up direct deposit accounts.

Once you've set up direct deposit, payday will be simplified for you and your nanny.

What kind of help can I get to figure out things like nanny tax deductions?

Worry Free Nanny Software

Stop worrying! Hiring a nanny and taking care of the nanny taxes isn't all that scary. Did you know there's practically a nanny universe of resources and assistance out there? There are nanny schools, accountants who specialize in nanny tax deductions, nanny search databases online, nanny/family match websites, and so on. If you can't immediately identify anyone in your geographical area who specializes in nanny taxes, do an online search for help. While you're searching, don't be surprised if you come across different nanny software packages geared to help you calculate things like nanny income tax deductions.

If you're not comfortable using nanny accounting software, consider taking a course at a local community college to get familiar with various payroll accounting systems. For example, Simply Accounting is a software program used by many of small businesses to help keep track of revenue, expenses, and payroll deductions. Your first instinct might be to just pay someone else to do it. In the long-run, it's going to be cheaper to buy the nanny software and do the work yourself. The choice is completely yours: pay a person to do your taxes, or pay a software program to do them for you. As long as you can key in the minimum information required, operating nanny software won't require a degree in computer sciences.

Are nanny software programs worth the money?

The Benefits Of Nanny Software Programs

If you've ever filed your income tax online, you're probably comfortable (or at least aware) of the different types of accounting software available to you. The best thing about these software packages is that they include everything you need to file your nanny tax forms. Instead of downloading forms from different websites, visiting government offices for the forms, and making sure you have the right forms to begin with, these software programs offer one-stop resource guidance. You can do an Internet search for popular nanny software programs and either order the disc in the mail, or purchase the downloadable version that you can access immediately.

Nanny software programs come with easy-to-follow instructions and all of the nanny tax forms to help you calculate accurate nanny tax deductions. Instead of stacking a bunch of paperwork on your lap and using an online nanny tax calculator, the software uses the equivalent of a built-in nanny tax calculator. The software asks you the simple questions and does the hard math behind the scenes, so you don't have to.

Nanny employers fall into two categories: those who think they're accountants and those who know how to avoid unnecessary stress by purchasing nanny software. Which camp do you belong to?

Can I claim expenses related to employing a nanny in my home on my income tax forms?

Avoiding Penalities By Filing Nanny Tax Returns

People are often tempted to pay a nanny salary “under the table,” especially for short-term employment stints. After all, you're paying a nanny salary of less than a couple thousand dollars and it really isn't worth all of the time and paperwork involved, right? Not exactly. What happens when your nanny, who suddenly realizes that as a lower wage earner is eligible to apply for Earned Credit Revenue (EIC), asks you for a W-2 form? Your nanny has every right to apply for that credit but when she does, there's suddenly a nice man in an expensive suit banging on your door, demanding to know why you haven't paid your share of the nanny taxes. Uh oh! You've got some ‘splainin' to do.

By diligently filing all of the necessary nanny tax forms, you avoid putting yourself (and your nanny) in the uncomfortable position of having to defend yourself to the IRS. Good luck with that! Get in touch with someone who knows what they're doing. You might know another employer who's had lots of experience with it, or you might want to consider getting the help of a specialized nanny tax accountant to get you started. The important thing is to just get started. Period. By being on the up-and-up with your nanny tax deductions, you can legitimately begin to claim expenses directly related to live-in nanny pay (if that's your particular situation), or other expenses that may be reasonable and acceptable.

Is there an easier way to figure out my nanny income tax deductions?

Taking Advantage Of Online Nanny Tax Calculators

Hooray for the Internet! These days you can find online calculators to help you figure out how many calories you burn during exercise, calculators that convert currency, and even calculators to help you make important financial decisions. For those of you paying a nanny salary, the use of a nanny tax calculator will come in very handy.

Good ole Google will help you find one and from there it's just a matter of keying in the amount of nanny salary you pay, whether you pay weekly, bi-weekly, or monthly, where you live, etc. If you're going to use an online nanny tax calculator, just make sure it's specific enough and that it's current. Check to make sure that the rates the calculator uses are the equivalent of current income tax rates for the state in which you live. If you're not covering your taxes properly, that online nanny tax calculator might end up costing you more in the end. It's always best to pay your taxes right up front than be faced with fines and criminal prosecution.

After doing a search for an online nanny tax calculator, remember to have a look at the site it comes from. Usually these types of calculators are resources used by specific companies or agencies. These companies might hold the key to a wealth of resources related to nanny tax deductions, nanny tax forms, and nanny income tax in general. You may be required to create a free account to use their nanny tax calculators, and a fee for any further services. Look into it! It just might be worth your while.


Texas Nanny

Nannies4Hire Tip: A Texas nanny can be found by searching the classifieds, looking at on-line message boards, or contacting nanny agencies. Either the employing family or the nanny agency will be responsible for paying a nanny payroll tax.


Nanny Tax Assistance On-line

Nannies4Hire Tip: There are several Websites which can help families figure out how much tax to pay for nannies. These Websites typically offer a nanny tax calculator.

What should I look for when choosing an on-line nanny tax service?

On-line Nanny Tax Service

A nanny tax service can help families figure out the amount of taxes they should be paying to the federal government for their nannies. Don't sign up with the first nanny tax service you find, however. Use the following checklist to help you find the best nanny tax service for your needs.

  1. Experience-How long has the company been in business, and how much of that business deals with taxes on nannies?
  2. Service-Is there a toll-free number that you can use in case you need to talk to someone?
  3. Specialization-Does the nanny tax service specialize in this area, or does it service a wide variety of tax topics?
  4. User Friendly-Is the site easy to navigate? Are the instructions simply to follow?
  5. Guarantees-What guarantees do the company offer? What is their refund policy?
  6. Timeliness-How quickly will you get results from this nanny service?

Can a nanny on-line tax assistance site help me?

Nanny Tax Assistance On-line

Many people turn to their local tax accountant to help them with the withholding and payment of a nanny tax. Did you know, however, that there is also help for you on-line, and you can find it with just a click of the mouse? Figuring and paying your nanny's payroll tax doesn't have to be difficult. There are several on-line resources that will help you with your nanny tax. Once you're ready to begin, all you'll have to do is input the necessary information into the Website. The site will then use a nanny tax calculator to figure how much money you should be paying in taxes for your nanny. Most of these Websites will be able to help families living anywhere in the United States. Most Websites even address those states which need additional information regarding taxes for nannies.

What information should I have before hiring a nanny?

Hiring a Nanny

While many people may consider hiring a nanny, the actual process can be a little overwhelming. Nannies can be found in a number of ways, including word of mouth, advertising, message boards, and nanny agencies. In many cases, these agencies may include a large database that covers the entire country, listing nannies both locally and those who would be interested in moving to another state. Before you begin the process of hiring a nanny, do your research. Find out about the various services that nanny agencies provide. Look into the federal government's requirements regarding paying a nanny tax. Above all, go with your instincts. Once you begin interviewing nannies, pay attention to any doubts you may have about a particular person.

What taxes should be paid to a Texas nanny?

Texas Nanny

A family who employs a Texas nanny is responsible for paying a nanny tax on that person. Families who pay nannies more than $1500 in a calendar year must pay nanny taxes according to the standards set up by the federal government. These taxes include Social Security and Medicare, federal unemployment taxes, state employment taxes, and disability. For those families who use nanny agencies to employ their Texas nanny, the agency should pay the nanny tax only if the family pays the agency for the nanny's services. Otherwise, the family is responsible for paying the nanny payroll tax.

What is a nanny tax?

The Nanny Tax

When you hire someone to work in your home the government considers you an employer. Therefore, when you pay a nanny's salary you are responsible for paying nanny tax. Social Security, Medicare, state and federal unemployment tax and federal and state income tax are include in what is commonly known as "nanny taxes".


Hiring a Nanny

Nannies4Hire Tip: Most nanny agencies allow nannies to sign up for free. Families can then gain access to dozens, if not thousands of potential nanny candidates.


Virginia Nanny Agencies

Nannies4Hire Tip: Before hiring a Virginia nanny, families should be familiar with nanny tax laws. They should also have a nanny agreement drawn up that will protect the interests of both parties.


New Jersey Nanny

Nannies4Hire Tip: A New Jersey nanny can sign up with one of several available nanny agencies which are located in the New Jersey area or on-line. The agencies will then attempt to match the nanny with an employing family.

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