Are You Subject to the Household Services (Nanny) Tax?
If you pay an individual more than $2,000 in a calendar year for household services such as childcare/nanny services, you are considered a household employer. As such you are responsible for the reporting and payment of payroll taxes on your household employee(s). This includes filing quarterly state unemployment reports with the Idaho Department of Labor (and quarterly payment of state unemployment tax along with the filing), annual forms 910 and 967 with the Idaho State Tax Commission and annual forms W-3 and W-2 with the Social Security Administration. The form(s) W-2 must also be given to your household employee(s) before January 31st each year. These forms require personal information on the employee(s) as well – name, address and social security number – so be sure to obtain this information from the employee(s) when you hire them. In addition, payment of the Federal Unemployment, Social Security and Medicare taxes are done by filing schedule H with your individual income tax returns.
In preparation for these quarterly and year end filings, a household employer should obtain a Federal tax identification number as well as a state withholding number and a state unemployment number. The Federal tax identification number can be obtained on-line at www.irs.gov by clicking the “Apply for an Employer ID Number (EIN) link. The state numbers can be obtained at https://tax.idaho.gov by clicking the “Starting a business?” link. The key to ensuring that these filings are as painless as possible is good record keeping and preparation. Obtaining the state identification numbers can take some time, so the sooner you begin that process the better. Best not to wait until filing time to apply or you may find yourself filing late as you wait for the numbers. Keeping accurate records of your payments to your employee(s) will also make the process smoother.
If you think you may be subject to these Household Employer rules, please let us help you!
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