School is out, the weather is hot, and many families have hired a nanny or are looking to hire a nanny for the summer. Finding a great nanny is just the beginning for new household employers. Household employers will need to report their new hire to the state. They will also need a federal employer identification number (FEIN) and one or more tax accounts with their state and potentially with localities as well. The purpose of these tax accounts are so the nanny's wages can be reported and the taxes can be filed. All household employees, with very limited exceptions, require wage reporting and taxes to be withheld - this includes summer nannies, part-time workers, seasonal employees, and similar workers who don’t fit the typical 9 to 5, year-round arrangement that people generally think about when it comes to payroll taxes.
Any employee who earns $2100 should have Social Security and Medicare taxes withheld. Other employee/employer taxes may be required at lower earnings thresholds. Most household employees also require a year-end W-2 and the employer similarly needs a Schedule H for their respective year-end tax returns. In many states, workers’ compensation insurance is required even if the employee will only be working for a few weeks or months.
Generally, wages are reported and taxes are paid on calendar quarters so “summer” nannies may actually require 2 (or more) quarters of filing. Employers should keep these periods in mind when deciding employment periods and payroll dates:
Quarter 1: Jan-Mar
Quarter 2: Apr-Jun
Quarter 3: Jul-Sept
Quarter 4: Oct-Dec
Every locality and state is different when it comes to laws regarding short-term and seasonal employment. Please contact a NannyChex tax specialist for more information on your specific circumstances. Our unique pay as you go system ensures that you will only pay for the employment activity that you have. We also offer free registration and no cancellation fees, so you will not endure burdensome hidden charges. Call us today at 877-626-6924 to learn more!