It’s tax time again, which means it’s time to assess your family’s finances. If your household employs a nanny, babysitter, nurse, cleaning person or other domestic worker, be aware that you may owe the Internal Revenue Service (IRS) some extra change to account for the “Nanny Tax.”
Larry Jones, a Plano-based CPA at Jones & Jones, says that the Nanny Tax is short for three federal employment taxes: Social Security, Medicare and, in some cases, federal unemployment. “In general, if you pay an individual directly, that person is your employee. If you pay the worker more than $1,600 in 2008 or $1,700 in 2009, the Nanny Tax applies,” he says.
According to the IRS Web site, if these taxes must be paid, citizens must file a Household Employment Taxes form. In some cases, depending on the number of employees and annual wages, you may also be responsible for paying federal unemployment taxes, or state employment taxes, says Jones.
