Paying the "nanny tax" - My head is spinning!!

Melanie.Brown

I am so overloaded with information, my brain can't piece it all together.  We're having my college-age cousin nanny for us for the summer and we'll hire someone else when she goes back to school mid-September.  I've been researching everything regarding taxes and my head is spinning with so much information!  Anyone in WA state that can spell it out for me plain and simple?  Or know of a great website that does?  I don't have extra money to pay for a nanny payroll service or tax accountant so I'm doing it all on my own.

AuburnGirl04

We used this website - it had steps and was the one that made the most sense to me!  https://workingmoms.about.com/od/finances/ht/Nannytax.htm

and we read the latest publication 926 from the IRS. 

A few notes: You will need to do Step 8 towards the beginning of everything because, at least in Texas, you will have to pay state unemployment tax quarterly and i think they wanted the employer number when you sign up on the website.

You are not required to withhold income tax from your nanny's paycheck, so we haven't and always tell our nannies upfront "be sure you set aside some money for income tax you'll get hit with at the end of the year".

Also, we did not use a payroll system either - we kept track of our weekly payments to our nanny in a spreadsheet.  And at the end of the year, we bought turbo tax home and small business.  It creates your W-2 forms and everything!

Good luck.  You can do it!

twinsmom23

I thought this website spelled everything out as easily as possible (it is pretty complicated): https://www.nannytaxtools.com/

Miss Maverick

Being in WA here are a few things to do:

You will need to register with the state via a Master Business Application. This will cover both Employment Security and L&I registration (unless nanny will be covered with the home owners insurance). You will need to file a quarterly tax return with Both of these departments. Those forms you can complete and file online. www.access.wa.gov us the website I believe (I am at home so I apologize I'd I am wrong). WA is one of the few states that requires hours be reported for all wages earned, so if you are paying a certain dollar amount per week, think about how many hours that would be and keep it above min. wage. The hours will be reported on the quarterly tax returns.

 For paying your nanny, you would only withhold Social Security and Medicare from the wages earned (4.2% and 1.45% respectively). You will pay or write off the employer portion of this taxes when filing the Schedule C with your personal income tax return. 

I know that this can be daunting - but between the PP link to publication 926 and he WA website, that should get you started.

preggersin2011

I would ask the college student if they are planning on claiming the income or not... there is a good chance they may not be since more income = less in aide 

yasmin32

Nanny taxes are complicated.  I tried to do it myself and it was just too much!  I use a nanny tax service that only costs a dollar or two a day!  If you could afford this much I think you need to try them. 
I use www.4nannytaxes.com and its worth every penny.

I suggest that you call with your questions, because if you are using a college student, there is a certain limit when you don't have to pay taxes at all!