Equifax

Finance Blog

Stay financially savvy with the Equifax Advisor.

Sign up for our FREE Monthly Email Newsletter

 

Thank you for signing up for the FREE Equifax monthly newsletter

In addition to keeping in the financial know, you may be interested in checking your credit score and report.

Understand your credit. Help protect your identity.

Equifax Complete™ Premier Plan

  • Know What May Influence Your Credit Score and Be Alerted of Changes
    Credit score monitoring with custom alerts
    Important Disclosure: The Equifax credit score and 3-Bureau credit scores are based on an Equifax credit score model and are not the same scores used by 3rd parties to assess your creditworthiness.¹
  • Help Protect Your Identity
    Automatic fraud alerts encourages lenders to take extra steps to verify your identity²
  • Lock Your Credit
    The ability to lock and unlock your Equifax Credit Report³
Save 75% your first 30 days with the purchase of Equifax Complete™ Premier

$4.95 for the first 30 days, then $19.95 per month thereafter. You may cancel at any time; however, we do not provide partial month refunds.4

¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.

²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.

³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.

4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.

Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.

The Nanny Tax: How to Pay Nannies, Babysitters, and Home Help

Written by Eva Rosenberg on September 15, 2010 in Tax  |   4 comments

The Nanny Tax: How to Pay Nannies, Babysitters, and Home Help When it comes to small businesses, there are about a million tax and licensing laws designed to stifle productivity, creativity, and enthusiasm. But those are nothing compared to the traps ordinary people face in…

Nanny Tax for babysitters and home helpThe Nanny Tax: How to Pay Nannies, Babysitters, and Home Help

When it comes to small businesses, there are about a million tax and licensing laws designed to stifle productivity, creativity, and enthusiasm. But those are nothing compared to the traps ordinary people face in trying to comply with rules of the so-called nanny tax.

If someone works in your home and doesn’t have a full-blown business—with a business license and business cards, etc.—you are responsible for that person’s taxes. In 2010, the person who works in or around your home and earns $1,700 or more from you falls into this category.

Think about the folks you pay directly—babysitters, health-care workers, housekeepers, child-care providers, yard workers, drivers…You know who they are—the people who tend to work under the table, without reporting their income at all.

The IRS makes dealing with these taxes sound simple, as if all you have to do is blithely file a Schedule H, Household Employment Taxes, with your personal tax return each year.

Not even close!

Nanny Tax Paperwork Needed When You Hire

Start out by getting an Employer Identification Number (EIN) from the IRS. It’s available online. Register as an employer with your state, too:

1. Form I-9, Employment Eligibility Verification. Photocopy the two forms of identification used, one of which must be a Social Security card.
2. Form W-4, Employee’s Withholding Allowance Certificate. Get one signed for each employee.

Keep time cards to prove the hours worked. You must issue paychecks, with appropriate withholding for Social Security and state disability. There are lots of online calculators to help you figure out how much to withhold for federal and state taxes.

Nanny Tax Paperwork Needed Quarterly

Each quarter, you must file payroll tax returns with your state and pay the unemployment and disability taxes.

Remember to pay estimated taxes to the IRS to cover your employee’s Social Security, Medicare, and unemployment taxes.

Nanny Tax Paperwork Needed Annually

After the end of the year, in January, you need to file the annual payroll tax returns with your state. You will give your employees a W-2 in January, and you will file the Form W-3 by the end of February (on paper) or March (electronically).

You will attach Schedule H to your personal tax return and pay any extra taxes due.

Exemptions from the Nanny Tax

The good news is that employees under the age of 18 are exempt from the payroll tax rules when they earn less than $1,000 per quarter. I call it the “teenybopper exemption.” It means if a high schooler babysits your kids, or the kid next door mows your grass, you may pay them up to $333 per month (about $75 per week) throughout the year without dealing with the payroll tax nightmare.

Your own children, under 21 years of age, and your spouse are exempt from the taxes. Your parents are exempt—or they might not be. Read IRS Publication 926, Household Employer’s Tax Guide, for more information. Or say to heck with it all and hire a payroll service to do it for you. You will find more nanny tax calculators, service providers, and tips at TaxMama.com.

Last Caveat

Should you ever consider running for public office or get appointed to a judgeship, or any position of visibility, get your house in order—at all costs! Otherwise, pray your in-home help payments never get audited.

Eva Rosenberg, EA is the publisher of TaxMama.com, where your tax questions are answered. Eva is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com.

Read More:

Phantom Income from a Short Sale or Foreclosure? TaxMama Gives You Two Ways to Avoid the Tax
New Tax Increase for Wealthy Americans: Will You Pay More?
Tax Tips for Commercial Real Estate Owners
Hiring? Do Your New Hires Qualify You for Tax Credits?

4 comments

  1. SeanW says:

    I'm Canadian and had the same problem. I ended up writing some payroll calculator software to help me out, and eventually started my own nanny payroll service. It's self serve and web based, so the cost to use it is low.

    Most of what you describe in the article applies to Canada, it's just that all the terms and forms are different.

  2. tax4nanny says:

    Tax 4 Nanny provides a no frills service to process nanny taxes without little or no trouble at all.

  3. Elizabeth says:

    This is a great and informative article on the ins and outs of nanny taxes. I have recently hired my first nanny, well household employee ever, and was super confused with all the rules. I ended up calling GTM payroll services on the advice of a friend. I found them extremely helpful, ended up signing up, and they did all of the things listed above for me. It is great to know that are amazing resources out there for household employers!

  4. Anonymous says:

    Great advice. If you need to figure out how much to pay a babysitter or nanny you can check out a national survey here: http://ReliableSitters.org

    Click on ‘Babysitting Rates’ on the right hand side. Then look for the city nearest you for average rates. Particular circumstances apply so just take this rates as a guide.

    Hope that helps!


Leave a Comment


Name :


Commenting guidelines

We welcome your interest and participation on this forum, but be aware that comments will be published at Equifax's sole discretion. Please don't use this blog to submit questions or concerns about your Equifax credit report or raise customer service issues. Instead, you should contact Equifax directly for all such matters and any attempts to do so in this forum will be promptly re-directed.

Some other factors to consider when commenting:
  1. Registration and privacy. While no registration is required to visit our forum, participants wishing to post a message must register by creating an account. All personal information provided by forum members incident to registration is governed by our Terms of Use and Privacy Policy.
  2. All comments are anonymous. We'll delete your name, e-mail address, and any other identifying information, including details about your investments.
  3. We can't post or respond to every comment - As much as we'd like to, we can't post every comment, nor can we guarantee that we will respond to each individual message. All questions or comments about your Equifax credit report or similar customer service issues should be handled by contacting Equifax directly.
  4. Don't offer specific legal, tax or financial advice. All of the materials on this Site are for information, education, and noncommercial purposes only and this forum is not intended as a means of expressing views or ideas regarding any specific legal, tax, or investment advice. While offering general rules of thumb is both permitted and encouraged, recommending specific ideas or strategies regarding investments, taxes, and related matters is prohibited.
  5. Credit Repair. This blog is not intended as a venue for the discussion or exchange of ideas regarding credit repair or other strategies intended to assist visitors and community members improve or otherwise modify their credit histories, ratings or scores.
  6. Stay on topic. Your comment should be concise and pertain to the specific post in question.
  7. Be respectful of the community. The use of profanity, offensive language, spam, and personal attacks will not be tolerated and egregious or repeat offenders will be banned from future participation. We encourage disagreement and healthy debate, but please refrain from personal attacks on our WordPresss and contributors.
  8. Finally: Participation in this forum may be terminated by Equifax immediately and without notice for failure to comply with any guidelines or Terms of Use. As such, you should familiarize yourself with all pertinent requirements prior to submitting any response through the blog or otherwise. All opinions expressed in this forum are solely those of the individual submitting the comment, and don't necessarily represent the views of Equifax or its management.

Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.


Tax Archive