What Is The Nanny Tax, And Do I Have To Pay It?

This post is sponsored by our partners at Care.com.

nanny tax

If you’re like me and you hear the words Nanny Tax, you’re probably thinking, that doesn’t apply to me because I don’t have a nanny.

Except, you probably have a babysitter, right?  And maybe you even have a housekeeper or a senior caregiver?

And, if you’re like me, and you see that paying a babysitter or housekeeper $2,100 or more a year requires you to pay a nanny tax. You’re probably also thinking there’s no way that that applies to me because I couldn’t possibly pay a babysitter or housekeeper that much a year.

I’d say, like me, go add up your Venmo transfers for 2019.

See, $2,100 a year adds up super-fast, especially when the cost of a babysitter generally starts at about $15/hr.  And when you do the fast math, it really only takes having a babysitter twice a month for a few hours to get to $2,100 a year!

The same thing happens when you add up the cost of a housekeeper!  Two cleans a month at a little over $100 a clean and bam – you’ve hit $2,100 this year!

Yep – you, like me, have to pay the Nanny Tax!

So, what is the Nanny Tax, and how does one pay it?

Well, the nanny tax is a combination of federal and state tax requirements detailed in  IRS Publication 926  that families must manage when they hire a household employee, such as a nanny, housekeeper, senior caregiver or personal assistant. The taxes include:

  • Taxes withheld from the employee:  Social Security & Medicare taxes (FICA), as well as federal & state income taxes.
  • Taxes paid by the employer:  Social Security & Medicare taxes, as well as federal & state unemployment insurance.

In order to pay the Nanny Tax, you must apply for a Tax ID, calculate and track payroll, file tax returns, and complete year-end forms.

These year-round payroll and tax processes can take up about 55 hours of your time each year.

If you, like me, are starting to go cross-eyed and feeling overwhelmed – don’t stress.  Care.com HomePay can take care of it all.

See, I’m taking a big sigh of relief and so should you!

Families who use HomePay know every tax obligation and payroll is handled for them — without paperwork, risks, headaches or hassles. From paydays to tax time and all points in between, HomePay will take care of it all.

Care.com HomePay is the leading provider for nanny and tax payroll services, serving 60,000 families over the past 25 years. They are highly rated with 96% of their customers recommending their services. Since 1992, HomePay has filed over $2 million in tax filings and processed over $4 billion through their payroll services. 

And since you, like me, have most likely not even come close to filing 2 million tax returns, I think it’s safe to say that Care.com HomePay knows what they are doing!  Their staff is always available to field any questions you may have along the way. There is no question too small and no problem too big for their experts. 

Because let’s face it – taxes are confusing – but with Care.com HomePay, you can relax because they will take care of it all! Call today at 877-367-1976 to get your Nanny Taxes squared away and have peace of mind this tax season.

nanny tax