Learn what it takes to pay the employment taxes for your nanny.
Unfortunately, it does take more than just calculating what your tax liability is. You do have to part with the money, and you have to do so throughout the year. If you don’t, you run the risk of an underpayment penalty from the IRS. Don’t wait until the end of year. Take care of at least steps 1-3 soon after hiring your nanny.
Steps you need to take
- Calculate your tax liability for the whole year.
- Increase your withholdings to pay the required taxes throughout the year.
- Check out the specific requirements from your State and make the necessary quarterly payments.
- At the end of year, create a W-2 for your nanny.
- Save money by taking advantage of tax credits.
- Complete and file the appropriate paperwork at tax time.
Things you’ll need
- Records of all wages paid and taxes withheld
- Form W-4, to increase your withholdings
- Form W-2 and W-3, completed online
- Schedule H for your 1040 tax return
Next step: Nanny Payroll Tax Calculator