Remember the Nanny Tax

Do you have a household employee?

The “nanny tax” refers to the part of the tax code that deals with household workers that are treated as employees. The nanny tax rules require you to withhold Social Security and Medicare taxes for any household employee that earns $1,900 or more annually.

Who it applies to

Household employees include baby sitters, house cleaners, yard workers, and general labor that are not incorporated. It does not apply to companies that work around your home.

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Steps to take

If you have suppliers that work for you, you need to find out if they work for themselves (sole-proprietor) or whether they are organized as a business entity like an S-corporation, C-corporation or Limited Liability Company (LLC).If your help is not incorporated and you expect to pay them in excess of the threshold, please obtain the household employee’s Social Security number and then file the necessary tax forms to withhold the proper amounts.Should you need assistance with this please call.