Nannies (LEGALLY)

[catastrophe]

Looking into paying a nanny above board and Uncle Sam seems to really want to make it difficult.  Anyone have experience paying a nanny according to the rules (withholding social security & medicare, + paying unemployment taxes)?

[ben ji]

Nannies are for PANZY kids.

I was raised by the mean streets of Overland Park and a 1 eyed church deacon. I turned out just fine and so will your ungins.

[star seed 7]

Pm ksudub

[OK_Cat]

Sucks for your kids that you don’t love them


Sent from my iPhone using Tapatalk

[K-S-U-Wildcats!]

I'll post this here in case anyone else needs it.

KSU-Dub's Steps to Paying a Nanny Legally (In Kansas)

Step 1: Get yourself an Employer Identification Number (EIN). Go to https://sa.www4.irs.gov/modiein/individual/index.jsp

Step 2: Print out an I-9 (proof of legal status) for nanny to complete on first day of work. http://www.uscis.gov/sites/default/files/files/form/i-9.pdf Just file it away for safekeeping.

Step 3: Set up an account at www.kansasemployer.gov to pay your quarterly unemployment tax to Kansas. Call the unemployment office if you need help figuring this out (you probably will). They're very helpful and seem to understand what a pain in the ass this is for household employers to try to obey the law. Make yourself calendar reminders to pay this tax quarterly because otherwise you're going to forget. A new employer's Kansas UT is 2.7% of nanny's gross pay, but only on the first $14,000 (the taxable wage base). After that it is $0. The website will do these calculations for you, but you still need to file every quarter even if you don't owe tax.

Keep in mind, you're also going to owe federal unemployment tax of 0.6% on the first $7,000 of your nanny's gross pay. You pay this on your personal tax return (just use TurboTax or something - makes it easy).

Step 4: Decide when you're going to pay your nanny. Bi-weekly is most common. You're going to need some sort of program to record her hours, calculate the right amounts to withhold for FICA (SS and Medicare), and keep records. There are commercial services available, but I just use an excel spreadsheet I made for this purpose. Here is a link to the one I created. You can also withhold your nanny's income tax but I don't and I don't recommend this.

To be clear: Social Security is 6.2% of nanny's gross pay, Medicare is 1.45%. You're going to owe these same matching amounts as the employer (fun!) but you obviously don't withhold your amounts from her paycheck - just her share. You pay both her share and yours on your personal return. (Again, TurboTax will do this correctly for you).

Step 5: At the start of the new year, you need to give your nanny a W-2 so she can file her own income taxes. You do this by going to www.ssa.gov to report wages and create the W-2 for the nanny.

Step 6: As mentioned above, you pay all the SS and Medicare taxes you withheld from your nanny's wages, plus your matching share, plus the federal unemployment tax, on Schedule H of personal income tax return.

I think that covers it. You'll probably find all of this very annoying and overkill just to employ a nanny legally, but this is how you do it.

[The Big Train]

There's a very efficient non-censorship form of money that Uncle Sam doesn't and can't regulate that could be the solution here.   

[K-S-U-Wildcats!]

There's a very efficient non-censorship form of money that Uncle Sam doesn't and can't regulate that could be the solution here.   

The government doesn't need to track the money - they track the employment. Here's the most common ways employers get caught paying their employees under the table:

1. Pissed off employee rats you out.
2. Employee files their taxes (they'll need a W-2 for that).
3. Employee is terminated files for unemployment (unemployment office says "that's weird, I don't see that your employer has been paying any unemployment taxes").

Paying a nanny under the table is actually colossally stupid. A lot of people still do it.

And for what it is worth, the taxes you end up paying for doing this legally (your share of SS, Medicare, and unemployment taxes) are at least somewhat offset by the Dependent Care Tax Credit. So at least there's that.

[The Big Train]

There's a very efficient non-censorship form of money that Uncle Sam doesn't and can't regulate that could be the solution here.   

The government doesn't need to track the money - they track the employment. Here's the most common ways employers get caught paying their employees under the table:

1. Pissed off employee rats you out.
2. Employee files their taxes (they'll need a W-2 for that).
3. Employee is terminated files for unemployment (unemployment office says "that's weird, I don't see that your employer has been paying any unemployment taxes").

Paying a nanny under the table is actually colossally stupid. A lot of people still do it.

First off I was talking to the OP in jest. Secondly what employee doesn’t want to be paid with a deflationary currency?  Maybe just stick to attacking me with stuff you think you understand?

[K-S-U-Wildcats!]

The question was how to go about paying a nanny legally. Stop behaving like a jerk, please.

[catastrophe]

Thanks, KSUW. That is all in line with what I’ve been reading.

[catastrophe]

There's a very efficient non-censorship form of money that Uncle Sam doesn't and can't regulate that could be the solution here.   

Good one, but seriously you gotta grant me that btc sucks as currency right now...

[gatoveintisiete]

Take care of her health insurance and 401k too unless you are some kind of monster who wants her to die young and broke

[cfbandyman]

I'm pretty sure if you have an EIN, you will need to fill out a quarterly 941. If you are employing 1 person it shouldn't be that big of pain. That or the unemployoment for Kansas. That is like auto done by putting in the wages and it spits it out. Super easy (especially in my case were the house dad is paid straight rate each month.)

[Pete]

I'll post this here in case anyone else needs it.

KSU-Dub's Steps to Paying a Nanny Legally (In Kansas)

Step 1: Get yourself an Employer Identification Number (EIN). Go to https://sa.www4.irs.gov/modiein/individual/index.jsp

Step 2: Print out an I-9 (proof of legal status) for nanny to complete on first day of work. http://www.uscis.gov/sites/default/files/files/form/i-9.pdf Just file it away for safekeeping.

Step 3: Set up an account at www.kansasemployer.gov to pay your quarterly unemployment tax to Kansas. Call the unemployment office if you need help figuring this out (you probably will). They're very helpful and seem to understand what a pain in the ass this is for household employers to try to obey the law. Make yourself calendar reminders to pay this tax quarterly because otherwise you're going to forget. A new employer's Kansas UT is 2.7% of nanny's gross pay, but only on the first $14,000 (the taxable wage base). After that it is $0. The website will do these calculations for you, but you still need to file every quarter even if you don't owe tax.

Keep in mind, you're also going to owe federal unemployment tax of 0.6% on the first $7,000 of your nanny's gross pay. You pay this on your personal tax return (just use TurboTax or something - makes it easy).

Step 4: Decide when you're going to pay your nanny. Bi-weekly is most common. You're going to need some sort of program to record her hours, calculate the right amounts to withhold for FICA (SS and Medicare), and keep records. There are commercial services available, but I just use an excel spreadsheet I made for this purpose. Here is a link to the one I created. You can also withhold your nanny's income tax but I don't and I don't recommend this.

To be clear: Social Security is 6.2% of nanny's gross pay, Medicare is 1.45%. You're going to owe these same matching amounts as the employer (fun!) but you obviously don't withhold your amounts from her paycheck - just her share. You pay both her share and yours on your personal return. (Again, TurboTax will do this correctly for you).

Step 5: At the start of the new year, you need to give your nanny a W-2 so she can file her own income taxes. You do this by going to www.ssa.gov to report wages and create the W-2 for the nanny.

Step 6: As mentioned above, you pay all the SS and Medicare taxes you withheld from your nanny's wages, plus your matching share, plus the federal unemployment tax, on Schedule H of personal income tax return.

I think that covers it. You'll probably find all of this very annoying and overkill just to employ a nanny legally, but this is how you do it.

This is really helpful, thank you for doing this!!!

I agree with you that it would be dumb to risk not paying this, and it’s also the right thing to do for someone who you entrust your children with.  Go Cats

[steve dave]

probably goes without saying but make sure your nanny is constantly taking your kids to things where they interact with tons of other kids or your kids will start out weird in kindergarten.

[Pete]

This is probably more of a “kids” thread thing, but I am a firm believer in the “kids turn out like who they spend the most time with” theory.  Shitty other kids at their day care?  Your kid will be shitty.  Shitty nanny, your kid will be shitty.  We spent a small fortune (in lost wages) for my wife to stay home with our kids.  My wife is one of those super-patient-with-kids people...like never gets frustrated with them (all the love and logic stuff).  It’s no guarantee of non-shitty kids, but putting them with a shitty human virtually guarantees a shitty result.

[Pete]

If I had stayed home with our kids, they would have been rough ridin' maniacs.

[K-S-U-Wildcats!]

I'm pretty sure if you have an EIN, you will need to fill out a quarterly 941. If you are employing 1 person it shouldn't be that big of pain. That or the unemployoment for Kansas. That is like auto done by putting in the wages and it spits it out. Super easy (especially in my case were the house dad is paid straight rate each month.)

Great addition. I’ve never done this and never had an issue with it. I just pay the SS and Medicare in one lump sum when I file my own personal taxes annually and have never had to pay a penalty or anything. I should note, however, that I make sure to withhold enough from my paychecks to cover the taxes I’ll owe at year end for my nanny. Otherwise you’ll get dinged with a penalty for under-withholding (generally if you under-withhold by over $1,000).

But if you really want to do it by the book, paying the federal nanny taxes quarterly is probably the correct method.

[XocolateThundarr]

Couldn't you just fill out a W-9?

[wetwillie]

We all know why you got a nanny

[catastrophe]

FWIW This is for like a really small baby between 8am and 2:30pm so I’m not too worried about the kid adjusting to the real world just yet.

[catastrophe]

And thanks for all the tips everyone. gE always comes through!

[cfbandyman]

I'm pretty sure if you have an EIN, you will need to fill out a quarterly 941. If you are employing 1 person it shouldn't be that big of pain. That or the unemployoment for Kansas. That is like auto done by putting in the wages and it spits it out. Super easy (especially in my case were the house dad is paid straight rate each month.)

Great addition. I’ve never done this and never had an issue with it. I just pay the SS and Medicare in one lump sum when I file my own personal taxes annually and have never had to pay a penalty or anything. I should note, however, that I make sure to withhold enough from my paychecks to cover the taxes I’ll owe at year end for my nanny. Otherwise you’ll get dinged with a penalty for under-withholding (generally if you under-withhold by over $1,000).

But if you really want to do it by the book, paying the federal nanny taxes quarterly is probably the correct method.

I prefer it because you are calculating the SS and Medicare within the form, and it's 2 pages long, and you can plop the payment amount in, print, sign, and send in the form. I keep a copy of each quarter just named the same (ie 941.2017.Q1.pdf) so it's always ordered and I can open, change the values/quarter as needed, and file save as the next quarter, and it makes it easy to remind you to download the next year when it comes time. Plus, at the end of the year you have a record of what you have right there, and you go onto the SS site (as you stated) and fill out a W2/W3 (since there would be only 1 employee, the W3 is going to be identical as the W2 number wise) you already have all the #s right there. It's essentially plug and chug accounting.

I do agree with setting a reminder, I have one set up like a week after each quarter ends in my outlook. I think it takes me longer to print and sign the check and mail everything in than it does to fill it out.

KS one is nice because you can pay the unemployment via echeck right on the site.

[MakeItRain]

Looking into paying a nanny above board and Uncle Sam seems to really want to make it difficult.  Anyone have experience paying a nanny according to the rules (withholding social security & medicare, + paying unemployment taxes)?

I guess I don't understand what you're asking. Are you looking for a live-in nanny? If so I'd strongly recommend using a British Au Pair. You'll have more up front costs but less overall and the Au Pairs are generally better because they are more committed because they can't run home whenever. If you're just looking for a nanny to come and go I don't understand your tax question because nannies are independent contractors so they hear the burden of making.sure.those withholdings are taken care of. We had a nanny when we lived in Boston who came to our house 8 hours a day, we had to do some paperwork and sign some stuff for her, easy breezy.

[K-S-U-Wildcats!]

Looking into paying a nanny above board and Uncle Sam seems to really want to make it difficult.  Anyone have experience paying a nanny according to the rules (withholding social security & medicare, + paying unemployment taxes)?

I guess I don't understand what you're asking. Are you looking for a live-in nanny? If so I'd strongly recommend using a British Au Pair. You'll have more up front costs but less overall and the Au Pairs are generally better because they are more committed because they can't run home whenever. If you're just looking for a nanny to come and go I don't understand your tax question because nannies are independent contractors so they hear the burden of making.sure.those withholdings are taken care of. We had a nanny when we lived in Boston who came to our house 8 hours a day, we had to do some paperwork and sign some stuff for her, easy breezy.

A basic google search would tell you you are wrong about nannies being ICs. They are household employees.

And an au pair (live in nanny) is a BIG commitment that probably is not suitable for most folks. The idea that au pairs are “more committed” doesn’t make a lot of sense. One could argue that an AP is far less committed to caring for your child because they are primarily interested in the benefits to them (coming to the US, room and board, often a car, education, etc.) They’re also limited to 1 year. I’m going on 3 with my current nanny and consistency counts. Unless you are really interested in what amounts to hosting a foreign exchange student to take care of your kids, an AP is not worth the headache.