I am a nanny and I have a question about taxes

Question

Hello! I was just offered a nanny position. The family has told me to just put aside 1/3 of my pay to pay to the IRS at the end of the year. I thought that they were supposed to take the taxes out for me? Has anyone ever just paid them at the end of the year? Are there any penalties? I would love any suggestions that anyone may have. Thank you in advance!

Answer 1

If you are working in their home, then yes you should be treated as a household employee, and legally they are required to withhold taxes from your paychecks and pay employer taxes.  Many people hiring nannies don't do things legally.

Answer 2

VB and Wayne are correct, but I believe it also depends on how old you are.....if you are under a certain age and or don't make up to a certain amount then I don't think you have to pay taxes

Answer 3

You are considered self employed when you work as a nanny. Their advice to save out 1/3 is sound. They may be estimating a littel high, but it sounds right. There is no penalty for waiting until tax time to pay your taxes. My hubby is self employed and that is how we do it. He usually owes in at the end of the year, so we deduct that from our return.  

Answer 4

Your employer is cheating you.  A nanny is NEVER self-employed.  You work in THEIR home, for THEM.  They are not dropping their children off at your house and you aren't watching children for any other family.

Get a copy of IRS publication 926 and hand them a copy with your W-4.

They are required to accept the W-4, handle the withholding and payroll tax (they pay 1/2 and you pay 1/2) and file the W-2 for you at the end of the year.  They also owe unemployment tax.

25/$350/week will kick you into the covered range.

Answer 5

You are correct.  They are supposed to withhold taxes from your pay.  They may not want to do it that way but they are supposed to.  Tell them to go to IRS.gov and search for "Household Employee".

If they want to do it correctly, they need to withhold Federal/State Income Taxes, Social Security and Medicare from your paycheck as well as pay Unemployment and their share of Social Security and Medicare.

They really don't have a choice in the matter if they want to stay compliant with the law.

Answer 6

An employee takes direction from the employer. An independent contractor has a job to do and the employer doesnt say how to do it. My guess is the family has rules on how you deal with their children. They do not want to pay is why they want you to.