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I have a domestic (nanny, elder care giver, housekeeper) working in my home. What taxes do I need to pay?

In general, the Internal Revenue Service requires payroll tax filings by a domestic employer who pays a household employee more than $1600* cash wages in a calendar year. These payroll tax obligations may include:

• Social Security & Medicare Taxes (7.65% of Gross Wages) [FICA taxes]**
• Federal Unemployment Tax (FUTA) (0.8% of Gross Wages or less in Most Circumstances)
• State unemployment and disability insurance taxes levied on the employer.
• Advance payment of the earned income credit for eligible employees.

(* The $1600 threshold applies to 2008. $1500 was the threshold for 2006 and 2007 household payroll! Wage test is $1400 for years 2003 - 2005, $1300 for 2001 & 2002, $1200 for 2000, $1100 for 1998 & 1999, years 1995 - 1997 were $1000)
(** The FICA taxes are shared between employer and employee. Each party contributes 7.65%. If the family fails to collect this tax via payroll deductions from the employee, the family will be liable for both the employer and employee portions of the tax or 15.3% of gross wages.)

 More Details on Wage Tests for Liability

For More Information contact HomeWork Solutions, Inc.
at 1-800-NaniTax or e-mail and submit a question.