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Do You Owe a “Nanny Tax” For Your Household Worker?

November 3, 2022

NEW UPDATE

Posted November 3, 2022:

The Social Security Administration (SSA) has announced that the so called “nanny tax” threshold will increase by $200 in 2023. Cash paid by an employer for domestic services in the employer’s private home aren’t considered FICA wages in 2023 if the amount paid during the year is less than $2,600 (up from $2,400 in 2022). The SSA also reported that income earned by election workers won’t be subject to FICA tax in 2023 if the amount is less than $2,200 (up from $2,000 in 2022). For additional information, click here.


Posted March 18, 2022:

Did you employ a household worker in 2021? This could include a housekeeper, nanny, gardener, cook, health care worker, tutor or someone else. If so, you may owe what’s commonly called the “nanny tax.” If you paid him or her $2,300 or more in 2021 you must file Schedule H (Household Employment Taxes) with your individual tax return by the due date. On Schedule H, you must report any household employment tax and pay any taxes due. This includes Social Security tax and Medicare tax. You may also owe federal unemployment tax (FUTA) if you paid at least $1,000 in wages in any 2021 calendar quarter. FUTA is reported and paid separately. Contact us for help with these important tasks.


 

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Chris Powers, CPA

Chris helps her clients confidently navigate tricky tax laws and complex regulatory challenges.

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