Your Nanny’s Tax Withholdings

Form W-4

Click to open form W-4

You must collect a W-4 (tax withholdings) from your nanny.

Along with the I-9 form, you are also required to have your nanny complete a Form W-4 to determine your nanny’s federal income tax withholdings. Even if you will not be withholding income tax from your nanny’s pay, you should still complete the document and keep it with your records. Fortunately, the W-4 is a short form that only takes a few minutes to finish.

If you are withholding income tax

Pay special attention to what your nanny includes on lines 5 and 6.
Nanny withholdings formLine 5 is where your nanny will state the number of allowances she is claiming. Each allowance lowers the amount of income tax withheld and you will need this information when you create pay stubs and a W-2 at year’s end. If you nanny wants additional tax withheld, she can enter that amount on line 6.

Also take note of line 7. Depending on your nanny’s salary level, she may not incur any federal income tax liability. In this case, your nanny will write “Exempt” in line 7 and you will not need to worry about withholding any income tax from her paycheck.

Next step: Time Sheet