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When you become a household employer you also have payroll tax and reporting obligations
--the so-called "nanny taxes." The family -- not the nanny -- is ultimately responsible
for payroll and tax administration. Here's a quick check list:
• First you obtain state and federal tax IDs
• Next, you compute your employee's payroll, and decide if you are going to withhold federal,
state, and local income taxes • You need to track days and hours worked,
and then accurately calculate gross and net pay
• You record all gross wages, the amounts deducted, and include calculations for the
taxes you pay as the household employer • You complete and calculate tax forms as
well as file and remit the tax payment, usually quarterly, to the appropriate taxing authorities
• In January you have additional "year end" tax filings and reports, including the employee's
W-2, a W-3 , and a federal Schedule-H • You give your employee W-2 forms no later
than January 31st • You manage tax forms, correspondence,
and changing tax rates. Did you know your state unemployment tax rates and most income
tax rates change annually? This is a lot of recordkeeping and tax reporting
- the IRS estimates that a household employer will spend 60 hours a year on these activities.
Outsourcing to HomeWork Solutions may be a good option for you.