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Social Security and Medicare taxes are commonly referred to as FICA taxes. If you pay cash wages of $2,600 or more to any household employee in 2023 (or paid $2,400 in 2022), then you need to withhold and pay FICA taxes. FICA taxes are 15.3 percent of cash wages.
Only Businesses Need to Issue a Form 1099 You don't need to issue your housekeeper a form 1099. Your business must file a form 1099 with the IRS and to each unincorporated business or individual to whom you paid $600 or more during a given tax year.
The nanny is still responsible for reporting her nanny wages and filing an income tax return even if she did not receive a form W-2. This is accomplished by completing Form 4852 Substitute Form W-2. Tip!
You can calculate nanny taxes by taking 15.3% of the employee's gross pay. This covers the household employee's portion of Medicare and Social Security payments. Families who paid household work professionals should pay their federal income taxes by April 15.
Nannies are Employees This means, among other things, you will need to file a Form W-2 with the IRS instead of a 1099, as you would for a contractor. You will have to file taxes as an employer and adhere to state and federal laws regarding work hours, payment, and breaks.
Even if your nanny wants to be an independent contractor, you cannot treat them as such. Under California labor law (and federal and state tax law) you are the nanny's employer. This means, among other things, you will need to file a Form W-2 with the IRS instead of a 1099, as you would for a contractor.
The average cost of a full-time nanny in Maryland is $16.93 per hour. With the minimum wage in Maryland being $13.25 per hour, you can expect to pay a hourly rate between $13.25 and $25. A full-time nanny's hourly rate can depend on their location, responsibilities, qualifications, and the type of care needed.
Most contracts will require that you give two weeks of notice if you plan on quitting. It gives the family a little time to find back up childcare and tie up any loose ends with you. A nanny work agreement isn't a binding contract, but it is a professional agreement between the nanny and the employer.