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When you hire a nanny, either temporarily or on a permanent basis,
she is always your household's employee. She is not an independent
contractor. This is determined by the nature of work she performs,
not by the amount of money she is paid or the amount of time she
works for you.
You are not required to withhold Social Security and Medicare and pay
employer taxes unless you pay your nanny over $1500 in a calendar year
(2005 figures). Nannies are responsible for federal and state income
taxes on all wages earned in a calendar year.
Your household employment taxes will be approximately 10% - 12% of your employee's gross earnings. In addition, if you reside in Washington state you may also need to pay Worker's Compensation insurance. These taxes are in addition to your employee's salary. Here is how they break down:
- Social Security
- Medicare
- Federal Unemployment Insurance
- State Unemployment Insurance
- State Special Payroll Tax
- Washington State Worker's Compensation Insurance
Your local IRS and
State Department of Revenue offices can provide all of the forms
you need to get started as a household employee. For further information
please contact a household employment tax authority, Breedlove & Associates
or GTM & Associates.
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