Sorry to burst any bubbles, but Congress has not revamped the US tax code and done away with the necessity of paying the nanny tax and other household employer payroll taxes. That doesn’t seem likely to happen anytime soon, so get used to the joys of managing payroll taxes each every year. Here are some things you need to watch out for in 2014:
New Nanny Tax Wage Threshold
In 2013, household employers were subject to federal nanny/payroll taxes if they paid wages of $1,800 or more to their nanny. In 2014, that wage limit has increased to $1,900. It is important to note that this $1,900 threshold is for federal taxes such as social security. Each state also has their own wage threshold for when a household employer is subject to State nanny taxes like unemployment insurance. Check out our State Nanny Tax page for more details on individual states.
The Impact of the Affordable Care Act
The Patient Protection and Affordable Care Act, also known as Obamacare, has been in the news for years, but the laws biggest requirements are just starting to go into effect. Here’s what it means for you and your nanny:
- As a household employer, you are not required to provide health insurance to your nanny.
- However, you are now required to provide written notice to your nanny regarding the new health insurance marketplaces. Use this form if you will NOT be providing insurance. This is the notice if you WILL be providing insurance.
- If you do decide to contribute 50% or more of your nanny’s health insurance premium, then you may be eligible for employer tax credits. These details are still being worked out. You can find out more information from the Small Business Health Options Program website or call 1-800-706-7893.
Nannies and other household employees
- Nannies (and everyone else in the United States) are required to obtain health insurance by March 31st, 2014 or be subject to the Individual Mandate Excise Tax.
As more information becomes available, we’ll continue to keep everyone updated.