Nanny Tax

The “Nanny Tax” isn’t limited to a nannies. It also applies to housekeepers, maids, babysitters, gardeners or other household employees who aren’t independent contractors.


FICA: You have to withhold and pay FICA taxes if your nanny earns cash wages of $2,100 (annual threshold) or more (excluding the value of food and lodging) during calendar year 2019. If you reach the threshold, the entire wages (not just the excess) will be subject to FICA.

However, if your nanny is under age 18 and child care isn’t the nanny’s principal occupation, you don’t have to withhold FICA taxes. So, if your nanny is really a student who is a part-time baby-sitter, there’s no FICA tax liability for services the nanny provides. On the other hand, if your nanny is under age 18 and the job is the nanny’s principal occupation, you must withhold and pay FICA taxes.




If you prefer, you may pay your nanny’s share of social security and Medicare taxes from your own funds, instead of withholding it from pay. Using the figures from the above example, for each $300 of wages, you would pay your nanny the full $300 and also pay all of the total $45.90 in taxes.

If you do pay your nanny’s share of these taxes, your payments aren’t counted as additional cash wages for social security and Medicare tax purposes. In other words, you don’t have to compute social security and Medicare tax on the payments. However, your payments of the nanny’s taxes are treated as additional income to the nanny for federal income tax purposes, so you would have to include them as wages on the Form W-2 that you must provide, as explained below.


Reporting and paying: You must satisfy your “Nanny Tax” obligations by increasing your quarterly estimated tax payments or increasing your withholding from your wages, rather than making an annual lump-sum payment.




You’re also required to provide your nanny with a Form W-2. If the nanny’s 2018 wages are subject to FICA or income tax withholding, the W-2 is due by Jan. 31, 2019. Additionally, you must file a Form W-2 for 2018 with the Social Security Administration by Jan. 31, 2019. Your EIN must be included on the Form W-2.
