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- In the United States, the combination of payroll taxes withheld from a household employee and the employment taxes paid by their employer are commonly referred to as the nanny tax. Under US law, any family or individual that pays a household employee more than $2,100 (2018 & 2019) a year must withhold and pay Social Security and Medicare taxes, also known as FICA. The law mandates that all domestic workers, such as cooks, nannies, housekeepers and gardeners, are subject to the nanny tax.Federal unemployment insurance taxes must also be paid if the household pays any number of employees a total of $1,000 or more in a calendar quarter.State unemployment insurance taxes have the same requirement with the exceptions of California ($750), New York ($500), and Washington, D.C. ($500) have lower thresholds. The law does not allow a household employer to classify a domestic worker as an independent contractor when the employer sets the employee's schedule, dictates how duties are to be performed, and provides the tools and equipment to do the work. The nanny tax can be legally avoided by hiring someone through an agency that carries the nanny or employee on the agency's books as an employee.Parents that hire babysitters for their children are also required to pay the nanny tax if compensation exceeds the $2,100 wage threshold per year for any one sitter.Employers of household workers can offer benefits such as parking, public transportation, college tuition, and health insurance as non-taxable compensation. (en)
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- In the United States, the combination of payroll taxes withheld from a household employee and the employment taxes paid by their employer are commonly referred to as the nanny tax. Under US law, any family or individual that pays a household employee more than $2,100 (2018 & 2019) a year must withhold and pay Social Security and Medicare taxes, also known as FICA. The law mandates that all domestic workers, such as cooks, nannies, housekeepers and gardeners, are subject to the nanny tax.Federal unemployment insurance taxes must also be paid if the household pays any number of employees a total of $1,000 or more in a calendar quarter.State unemployment insurance taxes have the same requirement with the exceptions of California ($750), New York ($500), and Washington, D.C. ($500) have lower (en)
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