Household Employment Taxes ("Nanny Tax")
Who is an "employee"? What taxes are you obligated to pay? How do you report the payments? The answers to these are important questions whether or not you intend to run for elected office.
You may be obligated to pay and withhold Social Security and Medicare (FICA) taxes and also to pay federal unemployment (FUTA) taxes if you employ someone to:
- Care for your children
- Care for a disabled or elderly dependent in your home
- Clean your residence
- Cook or provide other personal services in or around your home
You must file a Schedule H with Form 1040 if you paid any one household employee cash wages in excess of the yearly limit or withheld federal income tax during the tax year, or paid cash wages of $1,000 or more during any calendar quarter. On Schedule H you report Social Security and Medicare taxes, federal income taxes withheld, if any, and federal unemployment taxes from your household employees. Total household employment taxes from Schedule H are entered as an "Other Tax" on Form 1040.
