We receive a LOT of questions from families about household employer taxes. Am I considered an employer? Am I required to pay taxes for my caregiver? How much are they? All great questions. The general answers are that people who pay a nanny or other caregiver to perform duties in or around their home ARE considered household employers and are required to pay taxes for their employee(s) if you pay that person $1,700 (2011) or more in a calendar year.
The great news is that by taking advantage of tax breaks such as Dependent Care Accounts / Flexible Spending Accounts and Child and Dependent Tax Breaks, families can often offset or even exceed their nanny tax payments. That means that by paying taxes legally, families can often actually save money!
Here are some resources and information related to household employer taxes that help shed some light on the benefits and requirements of paying taxes for household employees.
FREE Nanny Tax Calculator provided by our partners, Breedlove & Associates.
Are nanny taxes affordable? Tax breaks and other benefits of compliance.
Wondering if you’re considered a household employer. Check out: Who is a household employer?
Learn more about Employer Tax Responsibilities.