Nanny Tax--It's Not Just for Nanny's

Do you have a household employee? Don’t overlook the “nanny tax” as you review your filing requirements for 2013. You could be liable to pay state and federal payroll taxes.

A household employee is someone that you hire to work in or around your home. It doesn’t matter if they are employed part-time or full-time or paid by the job, hourly or weekly. This may be a babysitter, housekeeper, gardener, maid, or a nurse.

Not everyone who works around your house is an employee. For instance, if a lawn service sends someone to cut your grass each week or spread fertilizer, that person is not your employee. Generally, workers who bring their own tools, do work for multiple customers, or control when and how they do the work, are not your household employees.

If you paid a household employee more than $1,800 last year you are generally responsible for 2013 payroll tax. However, federal unemployment tax kicks in if you pay more than $1,000 to all domestic employees in any quarter.

If you have a household employee, you'll generally be responsible for 2013 payroll taxes if you paid that individual more than $1,800 last year.

If you need assistance determining if your hired help is an employee or how the nanny tax will affect your taxes, contact our office at (260) 497-9761 to schedule an appointment with our advisors.