Once the year is over, you will need to fill out a few additional forms for the April tax deadline. Give your nanny a W-2 for her tax returns and submit a copy of W-2 A and W-3 to the Social Security Administration. You may also need to fill out an annual voting form if your state requires it. Finally, with your federal tax return, you must file a Schedule H that allows you to report household tax. It is so important to remember that nannies cannot be added to the company`s payroll if you own your own business – they are domestic workers, not company employees, and must be paid separately. The CA law requires all employers to provide their employees with the following notices: Follow the rules when it comes to paying a nanny or janitor fairly and, according to the books, make sure they get all the legal benefits from the work they do. These employees often become family members; It`s important to see that they are given most of what you can give. Count your nanny`s hours, multiply them by the hourly rate, and add overtime pay to get the gross (pre-tax) amount you owe. Subtract Taxes from Social Security and Medicare, income taxes, and any other state or local taxes that may be incurred — usually about 10 percent of gross salary. The net is your nanny`s take-home salary, so cut that check. In addition, Hand In Hand is a great resource to overcome all kinds of challenges related to domestic employment and create a more dignified and respectful workplace for all. Please use the excellent templates of free contracts and travel guides. In addition to the potential tax savings, by paying nanny taxes, you can rest assured that the IRS won`t hit.
If you`re caught not paying – like when your former nanny applies for unemployment after your child goes to school full-time and the employment office sees you haven`t paid taxes – you can expect an audit, tax arrears plus penalties and interest, and perhaps tax evasion fees. It doesn`t end well for anyone. As your nanny`s employer, you will need a Federal Employer Identification Number (EIN). Apply online. Your nanny must complete a Form I-9, a Federal Form W-4 (PDF), and a state withholding tax form if your state charges income tax. Independent contractor vs employee? While less paperwork is required when hiring an independent contractor, a nanny is almost always considered an employee under federal law. Since the household or employer determines the hours the nanny must work, as well as certain tasks such as caring for children and other household chores, a nanny would not meet the requirements for classification as an independent contractor. Workers who are classified as independent contractors set their own hours and can usually work as they wish.
For a nanny to be classified as a freelance entrepreneur, she would have set her own schedule (not a very good idea to hire someone to take care of your children), to be available to the general public, and is only required to complete a job, but no matter how she does it (again unlikely). If you hire your nanny, it`s a good idea to have a full family employment contract. This document includes state guidelines such as the nanny`s working hours, how much and when she will be paid, basic employment guidelines, and dismissal conditions and procedures. You can also add additional privacy obligations and guidelines. It`s easy to create a nanny family agreement with Rocket Lawyer. Job Eligibility Before a nanny starts working, ask her to fill out a Job Eligibility Verification Form (I-9). Read the instructions on the form and check the nanny`s proof of employability. The potential nanny must be willing to present a combination of documents as proof of their ability to work legally in the United States Documents may include a Social Security card, driver`s license, birth certificate, passport, green card, or work permit, or a combination of these.
You must make copies of these documents and keep them on file with the completed Form I-9. Tax obligations If your nanny receives at least $1,500 a year, the employer contributes to Social Security and Medicare. The employer pays half of the social security taxes and deducts the other half from the nanny`s salary. The employer can also choose to withhold income tax, although this is optional. However, it is usually more convenient for the domestic worker. If your nanny is taking a job, ask her to fill out a W-4 form so you know how much you need to deduct from her salary. You will also need to issue her a Form W-2 each year so that she can report her income when she files her tax return. Overtime pay All domestic workers, including nannies, must be paid for overtime under federal law. Every time she works more than 40 hours in a 7-day week, you have to pay her 1.5 times her salary. However, resident nannies do not need to be paid overtime. However, there may be other forms of compensation. Check with your state`s Department of Labor and Employment for more information.
1. Submit your employer identification numbers. As a nanny employer, you will need a state and federal employer identification number. To obtain a state number, contact your state office that handles the job. To obtain a Federal Employer Identification Number, use the International Revenue Service Form SS-4. If you plan to pay your nanny more than $2,200 a year — or an average of at least $183 a month — you`ll have to pay taxes. And yes, you should pay them. In fact, you and your nanny are in a better position when you pay and report taxes – with tax breaks for you and benefits for them. It is also the law. Do you use a nanny sharing service to share childcare costs with another family? You must both follow the steps above to establish yourself as a housekeeper with the IRS and your state, pay the nanny separately, and withhold and pay the appropriate taxes to the IRS and the state. And make sure the combined rates you pay add up to the minimum wage in your area. All domestic workers are classified by the hour (not exempt) and are subject to minimum wage protection.
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