As a parent, you know the importance of having a nanny. Nannies provide necessary care for your children, and you rely on them to be there when you can't be (or just need a break!). But as an employer, it's your job to understand how to pay your nanny legally. In this article, we'll cover the laws that govern hiring employees such as nannies and what you should do when paying them their wages. We'll also cover some of the basics of paying taxes on behalf of employees like nannies. This way, you'll have peace of mind knowing that all your bases are covered!
A recurring question to our client support staff concerns whether a family can treat their nanny (or other household staff) as an independent contractor, provide the nanny a 1099 Form instead of a W-2, and avoid the entire issue of payroll taxes.⠀
If you answer YES to all of the following questions, the nanny or household worker IS your employee and will need to be paid with a W2 NOT a 1099:⠀⠀
The household worker provided services in your private home -or- another private home as part of an arrangement for nanny share payroll taxes.⠀⠀⠀⠀⠀⠀
You directly paid the household worker $2200 or more for services in the year (2022)
The household worker is 18 years or older.⠀⠀⠀⠀⠀⠀⠀
A household employee must be provided a Form W-2 – only true independent contractors are provided a 1099 form. There is no nanny independent contractor – you always have the right to control her work.
According to the IRS, any nanny that works in the home of a family is an employee. Parent employers are legally liable to withhold Federal Income Tax, State Income Tax, Social Security, and Medicare taxes from the nanny’s wages. The parent employers must pay additional taxes: the other half of Social Security, Federal, Unemployment, and State Unemployment. If you register with one of the two listed below, we will waive your registration fee ($100 value). You can get more information from these companies below: