The Nanny Tax

The Nanny Tax isn’t just for the Nanny. The Nanny Tax covers all household employees. If you have someone working in your home as an employee you may be subject to various household taxes for hired workers in your home.

When you hire someone to work in your home you become an employer. Now that you are an employer you have responsibilities to the federal government for Social Security, Medicare, and Unemployment Tax.

Income Tax Returns for Household Workers

TurboTax Home & Business, or the Business Edition can assist you with all of your needs to prepare and file the proper income tax return. Whether you’re the employer or the self employed individual, TurboTax has you covered.

Self Employed Household Worker

If your household worker is self employed, then he or she is responsible for all taxes. In this scenario you will have to provide a 1099-MISC tax form by January 31st for the prior years’ work.

You will also need the self employed person to fill out tax form W-9 to document the Social Security number of that worker.

Citizenship of Household Worker or Employee

Make sure your hired worker is eligible to work in the United States. Tax Form I – 9 can be obtained from the US Citizenship and Immigration Services. You do not have to send this form into the IRS just keep it for your own records.

You are an Employer if you Hired a Household Worker Such as;

  • Nanny, Au Pair, Babysitter
  • Health Caretaker, Private Nurse
  • Cleaning Person, Maid, Housekeeper
  • Landscapers, Gardeners
  • Chauffeurs, Personal Driver
  • Personal Assistant, Errand Runner, Personal Chef

You are not an Employer if you Hired a Household Worker Such as;

  • If you hired someone who owns their own business
  • If you hired someone through an agency
  • If you hired someone who uses their own equipment and supplies

Having the proper tax forms for your personal situation is the best way to avoid lengthy delays, or a tax audit.
TurboTax will give you all the tax guidance you need if you have people working in your home as employees, or self employed.