Nanny Taxes?

Taytee

If you use a service, does the agency take care of taxes for you or do you still have to figure that part out and withhold etc? I think this is the one part of having a Nanny that kind of stresses me out. That and the unpredictability of what do you do if your Nanny up and quits on you!

naclh2otaffy

Wouldn't they be similar to a contractor where they are responsible for their own taxes? That's what happens to me with some of my wah jobs. I automatically save a percentage of each check so I've got it come tax time.

Temp13436125005166

We have a nanny and I do the taxes for her.  I take out her taxes from each paycheck and then make a W2 form for her at the end of the year.  It seems overwhelming at first but it's really not bad at all.  I have a spreadsheet I use and I just copy and paste each month and use this calculator to determine what to withhold with each check.  Then we pay that back to the IRS with our taxes (I think it's schedule H but we use turbo tax so it's all done online with them).

https://www.breedlove-online.com/payroll-calculator

But you don't have to do taxes you have several other options: (1) you can pay a service like breed-love to do it (2) you can not do the nanny's taxes at all just pay them the gross and they have to do it themselves (you'd still be responsible for paying the employer half though so you'd have to keep records... and fill out the schedule H I believe).

There may be more options too that I'm forgetting.  We use a service Nannies from the Heart (which we've been very happy with).  They don't do taxes for you but help you decide what to do and how to do it....  If you end up going the do it yourself route I'd be happy to help answer any more questions!  

Deltadee

We have a nanny and I figure out the taxes as well.  It's not too bad because I already to the payroll for our small company and am familiar with payroll taxes.  It looks like Michelle had some great advise on how to calculate, etc.

You're definitely right, one of the big downsides of a nanny is if they up and just quit on you, like our previous nanny.  I think the key is finding someone ethical and responsible that wouldn't just quit.  Thankfully our current nanny is wonderful and I know that she would never do anything like that.  But it put us in a big bind.  My neighbor helped us out a lot and watched DD while I tried to interview new nannies and work at the same time.

I wanted to use a service to locate a nanny the second time around because I got so burned the first time, but we just couldn't budget for the expense so quickly.  I used nannies4hire.com and got a lot of great responses.  There ended up being 3 that we loved.  My DH is a PI and was able to run the background searched for us, which saves us money.

I'd love to answer any other questions you have, if I can!

cookie1and2

If you pay more than $600 a year (I think?), you have to file taxes. ?We did for our nanny/sitter, and it was a big ol pain. ?You have to file quarterly with the state, and I ended up tipping the sitter for the taxes amount, so it ends up really adding up. ?I used an online tax calculator to figure out the taxes, then I printed a paystub for her, then filed quarterly and yearly with fed. ?

Temp13436125005166

I just wanted to add if you go with a placement agency they usually have a replacement nanny service in case your nanny quits before the contract ends, they'll find you a new one for no charge or less charge

Deltadee

Michelle&Russ:

I just wanted to add if you go with a placement agency they usually have a replacement nanny service in case your nanny quits before the contract ends, they'll find you a new one for no charge or less charge

Good point...this would have been great when we were left in a bind!