Whew! You found a nanny that you can trust with your kids. Yay! Now, you have to figure out how to pay them and deal with the so-called nanny tax. Drat! This guest post from Poppins Payroll will hopefully answer your questions!
Here’s the ABCs of Nanny Taxes.
The IRS estimates that it would take you 60 hours a year to comply with the federal nanny tax regulations. That doesn’t even include everything you have to do to pay Florida nanny taxes. Luckily, there is an easier way.
Here’s the scoop on nanny taxes: if you pay a household employee such as a nanny, babysitter, elder caregiver or house manager more than $1,000 in a calendar quarter, Florida says you have to pay reemployment tax. If you pay the same person $2,100 a year, the IRS says you are a household employer.
As a household employer, you must comply with certain tax obligations, commonly referred to as the “nanny taxes” or “household payroll taxes.” It’s complicated, but generally, after you have registered as an employer with all the appropriate agencies and reported your new hires, you must:
- Payroll – At every pay period, withhold certain taxes such as income tax, Social Security, and Medicare, and you must also calculate employer contributions such as unemployment taxes.
- Quarterly – submit the proper paperwork and payments to the correct agencies. The agencies will typically include the IRS, the State and any other local agencies that require remittances.
- Year-End – provide your employee with his or her W-2 form, submit a copy of the W-2 and W-3 to the Social Security Administration, submit state reconciliations if required and prepare a Schedule H to file with your individual tax returns.
To report your nanny’s wages and pay federal unemployment taxes, you’ll need certain tax forms (list includes federal forms only):
Form I-9: Your employee completes this form when hired and provides proof of ID.
Form W-4: Your employee completes this form which dictates how income tax is withheld.
Form 1040-ES: On a quarterly basis send this form to the IRS along with payment to report taxes from previous quarter.
Form W-2: Fill out Form W-2 if you pay Social Security and Medicare wages of $1,000 or more, and give Copies B, C and 2 to your nanny. Copy A (along with Form W-3) goes to the Social Security Administration.
Schedule H: If you pay your nanny cash wages of $1,000 or more in a calendar quarter or 2,100 in a calendar year file Schedule H.
The services provided by Poppins Payroll are a great option for those who don’t have the time to deal with in-home employee payroll and tax (and who does??). The features include:
- Experts – Poppins Payroll only does payroll and bookkeeping for household employees so they are experts in the area. Most standard payroll services aren’t as familiar with the unique aspects of household employer taxes and how they differ from small business taxes.
- Affordable – It wins on price. Poppins Payroll is a fraction of the price of other payroll options which can run $800- $1,200 a year (Ouch!). Instead, Poppins Payroll charges one clear fee – just $39 a month. If only everything was this straightforward.
- Easy Signup – It is simple to sign-up with Poppins Payroll: You just enter your basic information, and Poppins Payroll does the rest. Poppins Payroll gets your tax ids, sets up your state, federal and local accounts, calculates all the withholdings for you and keeps track of your bookkeeping online.
- Easy To Use – You manage and adjust your employee’s payroll on the web site. Poppins Payroll even sends you email reminders when you need to adjust payroll and emails the paystub directly to your employee.
Let’s face it, taxes can be, well, taxing. And with an option like Poppins Payroll, bringing in that extra help is a no-brainer. To top things off, right now Poppins Payroll is offering all new clients the first month free.
For more info about Poppins Payroll, check out their website and Facebook page!
