Paying nanny taxes is easy with AMS. Which is to say, we don’t actually pay the taxes for you, but we do make it easy to calculate, document, and prepare paychecks and payroll forms. In addition to household employers, our software support solutions are used by accounting professionals, farmers, and other small business owners. Its intuitive, menu-driven interface and versatile module packaging makes us popular for any number of W-2, 1099, and payroll service needs.
If you know what you’re looking for in a software solution, you can download our free demo and buy our software online at any time. If you’re just starting to think about hiring a professional nanny and heard about the hassle of paying nanny taxes, here’s an introductory guide to your responsibilities as an employer:
How to Classify Your Nanny Pay and Household Worker Status
It’s worth knowing that the standard 15.3% FICA/payroll taxes only apply if your nanny pay is more than $2,000 in the calendar year. (Short-term nanny employment may be subject to a 6% unemployment tax if you pay wages of more than $1,000 in any quarter of the calendar year.) But the bottom line is that you’re supposed to determine how to classify your household worker when you first hire the person. This includes the worker’s legal status (Form I-9) as well as the applicable federal and state payroll taxes.
Many commercially available household services are classified as self-employed contractors, but nanny pay is different in that these highly experienced and skilled professionals typically work with specific households in which the demands of the job, the paycheck, and the individual services are controlled by the household employer. Looking for an easier answer? As a good general rule of thumb, ask yourself this question: Are you the nanny’s boss, or are you the client of a nanny/babysitting service? Looking for an official determination? Use Form SS-8. Wondering what guidance is offered by the nanny industry itself? Check out this online resource.
Paying Nanny Taxes is Easy with Payroll Software
Use our Forms Filer platform and AMS Payroll module to handle all your employee documentation, payroll calculations, and end-of-year form filing support. It will also allow you to calculate and withhold any applicable income taxes the nanny may be accruing. That way, the nanny isn’t blindsided by a huge tax bill at the end of the filing year.
Looking for an advanced form filing solution? We also have modules for E-File and Software-Generated Forms that allow you to comply with all your filing requirements without leaving your home office. Looking for a more affordable software option? You can write your own nanny paychecks and keep your own payroll records. Then, with our platform software and Forms Filer Plus , you can take care of your 1040 Sch H and employer-based filing forms.
Two Ways of Paying Nanny Taxes
Some people withhold half, or 7.65% of their nanny’s payroll taxes, as is standard with other types of employees. However, many households elect to pay both the employee and employer-based nanny payroll taxes with a nanny payroll software. It makes things easier for the nanny. Again, you’ll also want to withhold or at least inform the nanny of federal and state income taxes that they are accruing from paycheck to paycheck.
When you feel confident in your payroll software solution, you can leverage these multiple options when first hiring and negotiating your nanny pay. How so? Suppose you make an initial salary offer to your first choice of the nanny applicants you received. The nanny counters by asking for a 10% increase. In response, you might offer instead to pay the additional 7.65% tax that the nanny would have to otherwise pay. And which simplifies their tax burden.
Download our free demo and then buy our software directly online. If you still have lingering questions, talk to our Sales and Information team at (800) 536-1099.