Some high-net-worth individuals may have a "nanny tax
" problem or, more technically, a household employment tax problem: When a family hires a worker to perform certain types of recurring work in the family's home, the worker may be treated as a household employee and the family may owe household employment taxes.
The IRS hiked the nanny tax
wage threshold by $100, to $1,500 for 2006.
Families earning up to pounds 58,000 a year will be eligible for the nanny tax
In spite of all the publicity in recent years on the "nanny tax
" (which includes Social Security, Medicare and Federal unemployment tax), many household employers still pay cash to babysitters, housekeepers, health aides and lawn-care workers without withholding taxes or filing the appropriate returns.
So only one in 13 people actually pays the nanny tax
? That may be one of the most hopeful statistics in this book.
Among 1995/96 legislative and regulatory developments covered are temporary regulations for automatic four-month extensions, earning limits increases for Social Security recipients, GAT-F changes affecting individual taxpayers, Nanny Tax
reporting requirements, final regulations on, the definition of S corporations, and self-employed health insurance regulations.
2 Jasen, Georgette and Tom Herman, "Is There a Way Around the Nanny Tax
?" Wall Street Journal, February 12, 1993, C1.
From an employment tax reporting standpoint, there are very few changes to the nanny tax
for the 2014 tax year.
Despite the publicity about the "nanny tax
" (which includes Social Security, Medicare (collectively, FICA) and federal unemployment tax (FUTA)), many household employers still pay their babysitters and housekeepers in cash, without withholding taxes or filing the correct forms.
" threshold: For 2004, FICA withholding will not be required for domestic employees who earn $1,400 or less annually (no increase from 2003).
Before its revision, the so-called "nanny tax
" required households paying housekeepers and baby sitters more than $50 in a calendar quarter to withhold, pay and report Social Security and Medicare tax (FICA) on those wages and unemployment tax (FUTA) if wages in aggregate were $1,000 or more in any calendar quarter.
As demonstrated, the "nanny tax
" has been a recurring theme around appointees for public office; however, it also applies to the average citizen who hires household help.