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Nanny pay question

sadie+wsadie+w member
in Working Moms
For those of you with a nanny, are there any additional taxes, etc. that I need to plan for?  (Since DH & I will technically be her employer) 

Also, can you use the $5,000 Dependent Care FSA AND also claim money you pay a nanny on your taxes for a credit, or do you have to choose one or the other?  If I have to choose one or the other, how do I figure out which is more beneficial - ie, what is the tax credit worth? 

Any other expenses or credits I should be aware of when attempting to figure out the true cost of having a nanny? 

Thanks!
BFP #1: 2/14/11. EDD: 10/20/11. Missed m/c discovered in April at 12 weeks, d&c. BFP #2: 12/27/11. EDD: 9/9/2012.
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Re: Nanny pay question

  • Melanie.BrownMelanie.Brown
    There are state and federal taxes you have to pay, google nanny taxes in your state. We're in the process of hiring and I'm still trying to figure it all out. If you can afford it there are nanny payroll services that do it all for you. As for the dependant savings account, I believe you can do both, but you can only claim on your taxes the portion over $5000 that you are not getting from your dependant savings account.
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  • DallasHornDallasHorn member

    Yes, there are other things you need to plan to pay:

    State taxes (if you have them). Texas does not have these, so can't help much here.

    Federal taxes which include the nanny's desired withholdings, SS and medicare taxes. There are 2 ways to do this. Schedule H with your federal tax return or via 941. I do the 941 which means I make monthly electronic deposits to the govt with the taxes and quarterly I fill out a short report reporting earnings and taxes.

    Federal umemployment:this is annually in January

    State unemployment. In Texas, this is all done online quarterly.

    I do all this myself. I have a excel spreadsheet with formulas set up to calculate current weekly pay and then deductions. Then a set of formulas to calculate YTD. Each tab in the excel is for 1 pay period, which I print out a copy of as the earnings statement.

    Hope this helps.

     

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  • sadie+wsadie+w member
    Thank you!
    BFP #1: 2/14/11. EDD: 10/20/11. Missed m/c discovered in April at 12 weeks, d&c. BFP #2: 12/27/11. EDD: 9/9/2012.
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