A fantastic approach to guarantee your kids get the care they need while you’re away is to hire a nanny. Employing a nanny, however, entails other duties, such as tax obligations. If nannies receive W-2 or 1099 papers, that is one of the most frequent queries that parents have.
The response to this is simple: nannies are regarded as household employees and consequently receive a W-2 form. Employers must deduct federal income taxes, Social Security, and Medicare from their nannies’ paychecks and give them a W-2 form at the end of the year. The IRS may impose penalties and fines if you don’t comply.
It’s crucial to remember that you might not be obligated to withhold Social Security and Medicare taxes if you pay your nanny less than $2,200 in a calendar year. However, if they made more than $600 in a calendar year, you will still need to give them a W-2 form.
Do you really need to send your nanny a W-2 form at this point? Yes, it is the answer. You are required to give them a W-2 form by January 31 of each year as their employer. This form is used to notify the Social Security Administration and the IRS of your nanny’s pay and tax deductions. This paper is required for your nanny to file their own taxes and decide whether they are entitled to a tax refund or additional taxes.
You must file a Copy A of the W-2 form with the Social Security Administration and a Copy 1 with the tax authority in your state in addition to giving it to your nanny. Penalties and fines may apply if this is not done.
In conclusion, it’s critical to comprehend your tax responsibilities as an employer if you hire a nanny. Nannies are regarded as domestic workers and are given a W-2 form. You must deduct federal income taxes, Social Security, and Medicare from your nanny’s pay, and provide her a W-2 form at the end of the year. You must give them a W-2 form by January 31 of each year and submit copies with the Social Security Administration and your state’s tax authority as their employer. You can avoid fines and guarantee a simple tax filing process for you and your nanny by meeting these duties.