Overview of the Nanny Tax

Many people are unaware of the nanny tax and whether or not they have to pay it. If you do not know the ins and outs of this tax, you may be cheating the IRS. If you paid more than $1,700 to a person to complete work in your home, there is a very good chance that you owe the nanny tax. This holds true no matter if the work was cleaning, watching your children, or something else. You will also owe this tax if you paid anybody more than $1,000 during a given calendar quarter in the previous year.

Exceptions to the Nanny Tax

There are several circumstances in which you may not owe the nanny tax. For example, if your helper is employed by an agency you will not owe this tax. In addition, if your child’s babysitter is a student under the age of 18, or does not provide the care in your home, you are exempt.

If you know that you will owe the nanny tax, it is important to discuss this with your help to ensure that both parties are aware of the arrangement and what it means.

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