Household Employment Taxes 101

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.

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5 thoughts on “Household Employment Taxes 101

  1. More people need to realize that by employing a nanny they become a household employer – glad you posted that link explaining who a household employer is. Hopefully the word will spread!

  2. I didn’t realize flex spending accounts could be applied toward childcare! Definitely going to be taking advantage of that from here on out!!

  3. this is all so helpful – thanks for posting the links! i checked out the nanny tax calculator and it’s pretty much exactly what i needed!

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