In addition to potential tax savings, paying nanny taxes lets you rest easy that the IRS won’t come knocking. a pandemic), verifiable employment history for applying for loans, and Social Security and Medicare for when they retire. Paying nanny taxes qualifies your nanny for healthcare subsidies, unemployment benefits should they lose their job due to no fault of their own (i.e. “Misclassification compounds the vulnerability.” Why do that to anyone - especially to someone caring for your child? “In-home care work is already precarious and often poorly paid,” he says. “Nannies are employees, not independent contractors.”īecause all of our employment protections hinge on employment status, Oswalt adds, misclassifying a nanny denies them the few safety net protections that exist. “We do it not just to follow the law but because it is the morally right thing to do,” says father and employment law expert Michael Oswalt, Associate Professor at Northern Illinois University College of Law. In fact, both you and your nanny are in a better position when you pay and report taxes - with tax breaks for you and benefits for them. If you’re planning to pay your nanny more than $2,200 year - or an average of at least $183 per month - you need to pay taxes.
So how do you pay a nanny the right way and what paperwork needs to be filled out? Here’s what you need to know. The nanny gains access such benefits as Medicare and Social Security, while you know that you have everything buttoned up - including nanny taxes - come April 15th. This provides long-term protections and bonuses for both you and the person you’re employing. That means accounting for payroll items such as taxes and benefits.
Unlike your 15-year-old niece who charges you $10 an hour and as much of the ice cream in the fridge as she wants to watch your kid for an evening, your nanny is a professional and should be paid as such.