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If you want to employ a nanny to work in your home, the nanny tax will be something to consider. Hiring a nanny or any household employee makes you an employer and you will be subject to the taxing rules and regulations of a household employer. Many families find the help of their accountant or a nanny tax preparer invaluable. Most preparers are glad to provide as a free service help in wading through the requirements, either by phone or on their websites. We recommend www.Breedlove-online.com as helpful and reliable referral. Also, you may qualify for a Flexible Spending Account through your employer where you can put away tax free up to $5000 each year to pay for your nanny.
According to the IRS, any nanny who follows your instructions, and who works in your home with tools that you provide (toys, diapers, coloring books), should be taxed by you. This is true even if your nanny works part-time for you and has other employers. It is also true if she lives in your home and receives pay in part through room and board.
If you plan on hiring a live-in nanny, it is important to contact either your local state taxing authority or a nanny tax preparer to get the specifics on your state rules.
It is also important to clarify at the beginning if your nanny is quoting her salary net of taxes or gross (before taxes). Once you know the salary you will be paying your nanny you will easily be able to determine your nanny's taxes by going to a site such as www.breedlove-online.com and calculating the nanny tax online. Since state laws can vary, the amount that your nanny contract states to pay your nanny per year and per quarter must meet different thresholds to qualify for tax.
Paying and taking care of the nanny tax can be a simple and easy task when you have a professional take care of it for you-and it's reasonably priced. This, along with a nanny background check, contract, and affordable salary are important aspects in the employment of a nanny in your home.
Learn more about the nanny tax with our helpful FAQ.
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