Nanny Taxes? What’s that about?

Dr. Lindsay Heller, The Nanny Doctor

A household employer is defined as anyone who pays an individual to perform duties in or around their home. Once you have hired a nanny and agreed on a nanny salary it is important to realize that you are now an employer and, as a result, have duties and responsibilities to your employee. A household employer should expect to pay approximately 9-11% of their employee’s gross wages in payroll tax. These taxes include State Unemployment Insurance, Federal Unemployment Insurance; the employer’s half of Social Security and Medicare, and other taxes that vary by state. Additionally, employers are required to withhold taxes from their employee’s paycheck including State and Federal Income Tax, the employee’s half of Social Security & Medicare and other taxes that vary by state.Â
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Because the logistics of employee payroll can be complicated, I recommend using a household payroll service. Breedlove and Associates, www.breedlove-online.com and GTM Payroll Services, www.gtm.com  both offer an easy-to-use service for nanny employers and are well regarded in the industry. Each service  can educate you on your employer responsibilities and handle your nanny payroll for a small monthly fee. These services are also knowledgeable about tax breaks available to employers and will assist you in finding the most affordable solution for your family!

We also highly recommend a nanny background check at the time of nanny hiring.

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