Each year more than a million parents nationwide elect to hire a nanny
to care for their children. In fact, the U.S. Department of Labor cites
the child care position as one of the fastest growing job sectors,
expected to grow 20 percent faster than other positions by 2020. This
means more than a million parents may or should be preparing to file
their “nanny taxes” along with their personal income taxes by the April
15 filing deadline. Failing to pay the tax can result in back taxes,
penalties, interest and fines up to $25,000.
Safety and convenience are common factors considered when hiring a
nanny. However many parents are unaware when hiring a nanny or any other
‘household employee’ that they may be responsible for filing an annual
“nanny tax” with the IRS.
“When you hire a nanny or other household employee, it’s a bit like
starting an in-home business. Parents have to keep up with all the tax
laws and calculations as well as filing regulations from taxing agencies
on the local, state and federal agencies,” said SurePayroll
CEO and President Michael Alter.
Nanny tax typically has to be paid when an employee earns more than
$1,000 per quarter or $1,800 per year, and the process is complicated
and time-intensive, similar to the requirements of a small business.
There are multiple steps involved, including filing an application with
the state for a Federal Employment Identification Number and submitting
forms to confirm the prospective employee is eligible for work. Next,
payroll needs to be set up and provisions made to pay Social Security
taxes and keep track of tax deductions, medical benefits and other
insurance. And then parents have to keep up with tax filings for
multiple agencies.
“It is a ton of extra work for parents already pressed for time and
energy-deprived. Fortunately for parents, there are online services that
relieve much of the burden. Today, you can literally run payroll from
your phone just about anywhere with some services,” said Alter. “Not
only are the right services cost-effective, but they can also provide
peace of mind allowing parents to solely focus on the most important
thing – their child.”
Below is a quick list of nanny tax burdens a parent could expect an
online payroll provider to handle:
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Paying the nanny either with direct deposit or by check – there’s no
additional fee for either.
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Collecting and paying all Social Security, Medicare, FUTA and other
payroll taxes.
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Completing all Nanny Tax paperwork including a 1040-ES four times a
year and a signature-ready Schedule H with your annual 1040.
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Providing a W-2 at the end of the year that the nanny can access
online 24/7.
Parents who have not yet filed their nanny payroll taxes should be sure
to seek guidance from an accountant or payroll professional.
For more information: www.SurePayroll.com.
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About SurePayroll
SurePayroll is a wholly owned subsidiary of Paychex, providing an easy,
online, convenient payroll service that keeps our small business
customers in control. SurePayroll also offers efficient online solutions
for managing 401(k) plans, health insurance, workers’ compensation,
employee screening and more. For accountants and banking partners,
SurePayroll provides private-label and co-branded services that enable
them to offer online
payroll processing to their small business clients. The company has
received numerous prestigious awards for its innovative technology, and
outstanding customer service and sales teams, including recognition from
PC Magazine, Accounting Today, the American Business Awards and many
others. For more information, please visit www.SurePayroll.com.
About Paychex
Paychex, Inc. (NASDAQ:PAYX) is a leading provider of payroll, human
resource, and benefits outsourcing solutions for small- to medium-sized
businesses. The company offers comprehensive payroll services, including
payroll processing, payroll tax administration, and employee pay
services, including direct deposit, check signing, and Readychex®. Human
resource services include 401(k) plan recordkeeping, section 125 plans,
a professional employer organization, time and attendance solutions, and
other administrative services for business. A variety of business
insurance products, including group health and workers' compensation,
are made available through Paychex Insurance Agency, Inc. Paychex was
founded in 1971. With headquarters in Rochester, New York, the company
has more than 100 offices serving approximately 567,000 payroll clients
as of May 31, 2012. For more information about Paychex and our products,
visit www.paychex.com.