Congratulations! You are a household employer. Here’s your ultimate nanny tax checklist.

As a household employer, staying compliant with nanny tax rules is crucial in 2024 and beyond. When you become a household employer you also have payroll tax and reporting obligations, the so-called nanny taxes. The family, and not the nanny, is ultimately responsible for payroll and tax compliance.  Use this nanny tax checklist to ensure you have all your bases covered when it comes to payroll and tax obligations for your household employees.

Nanny Tax Checklist Step 1 – Get a Federal Employer Identification Number (FEIN)

□ Apply for a FEIN with the IRS, which acts as your household employer tax ID

Checklist Step 2 – Determine Worker Classification

□ Review criteria to classify your worker correctly as an employee vs independent contractor. More often than not, you are the employer, and the nanny is your employee. See more about the latest Department of Labor ruling here.

Checklist Step 3 – Register with Your State

□ Register as an employer with your state labor department
□ Obtain state unemployment insurance ID numbers
□ Review rules on workers’ compensation insurance requirements

Checklist Step 4 – Set Up Payroll and Withholding

□ Have employees complete forms I-9, W-4 and state withholding forms
□ Set up a payroll schedule and system to track hours worked
□ Determine if you need to pay overtime, provide breaks/meal periods
□ Withhold federal income tax (if at employee’s request), Social Security/Medicare taxes from pay
□ Pay employer share of Social Security/Medicare taxes
□ Withhold state income tax if required in your state

Checklist Step 5 – Report and Pay Employment Taxes

□ Deposit federal employment taxes per IRS schedule
□ File annual Schedule H (federal) and state withholding returns
□ Issue W-2 forms to employees by January 31st after year-end
□ File state unemployment tax returns

Checklist Step 6 – Employee Benefits Compliance

□ Provide required notice of hire to state for new hires
□ Track paid sick leave, family leave, or other entitlements
□ Provide workers’ compensation coverage if required
□ Comply with Affordable Care Act rules if applicable

Checklist Step 7 – Stay Organized with Records

□ Maintain payroll registers, tax payment records, Forms W-4, I-9, etc.
□ Keep records for at least 4 years after filing tax returns

Leave it to the Nanny Tax Experts at HomeWork Solutions

Following all the federal, state, and local tax rules can be daunting. Let HomeWork Solutions handle your household employee payroll, tax, and HR compliance. With over 30 years specializing in household employment taxes, we make nanny taxes simple. Keep this nanny tax checklist but let us handle the rest.

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