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Do You Owe the Nanny Tax?
BrittG | | 
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Source: AssociateContent.com
So, you've decided to hire a nanny. Or a babysitter, childcare provider, or mother's helper -- take your pick of job titles. This is the person who will come into your home to care for your precious children while you're working.
So many issues loom large when hiring a nanny: Everything from experience to references to supervision - hello, Webcam! - to compatibility with your kids, household, and schedule. Often the tax implications are the last thing you consider, but this omission could come back to bite you.
What is the "Nanny Tax?"
The Nanny Tax is actually more than one tax. It is a term for all the payroll taxes that you, as an employer, pay on behalf of the nanny, your employee. Employer payroll taxes include Social Security, Medicare, and federal unemployment taxes that come out of your pocket, along with correct withholding of matching Social Security and Medicare taxes from your nanny's check. You may also need to withhold federal income tax from your nanny's wages, if she requests that you do so.
