October 6, 2006, Newsletter Issue #34: What is a Nanny Tax?
Tip of the Week
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.
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