Today TaxMama hears from Tom, who’d like to know. “Can you point my wife and me to any basic resource for information on tests to determine whether one needs to do withholding or taxes in general for nanny services? And, then, how to actually execute the necessary record keeping and filings.”
Sure Tom,
Ahh…I just found a free Calculator
https://www.nannynetwork.com/NannyTax/index.cfm
OK, here we go: IRS Publication 926
https://www.irs.gov/publications/p926/index.html
It will tell you at what quarterly/annual income level you become responsible for dealing with payroll taxes.
Also, consider reading the instructions to Schedule H – I found them quite informative when we had to file for clients.
https://www.irs.gov/pub/irs-pdf/f1040sh.pdf – Form
https://www.irs.gov/pub/irs-pdf/i1040sh.pdf – Instructions
As to execution, are you any good at doing payroll? If not, I urge you to get a payroll service.
Here’s IRS’s list of providers
https://www.irs.gov/efile/lists/0,,id=101120,00.html
https://www.paycycle.com/external/business/resources.jsp PayCycle charges about $300/year, less the first year)
Or use a Nanny tax service. They tend to charge about $400 or so per year – but are apt to give you more customized help and advice
https://www.4nannytaxes.com/ https://www.nannytax.com/
In fact, consider talking to Kathy Webb at 4nannytaxes – she struck me as having a good grasp of the issues.
https://www.4nannytaxes.com/INFO/media-contacts-nanny-taxes.cfm
I hope that helps?
And remember, you’ll find answers to lots of questions about Nanny Tax, and other tax information, free. Where? At TaxMama.com
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- Ask TaxMama :: Where taxes are fun and answers are free
- TaxQuips :: The number ONE tax podcast online
- IRS Publication 926 :: Household Employees
- IRS Schedule H :: Household Employees
- PayCycle :: Payroll Tax Processor
- 4NannyTaxes.com :: A Nanny Tax Service
- NannyTax.com :: A Nanny Tax Service
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