Families who employ a nanny, housekeeper, or other domestic (household) worker are subject to the rules surrounding the "Nanny Taxes."
The "Nanny Tax" legislation of 1994 requires domestic employers to disclose annual household staff wages exceeding $1100 on their personal income tax return. Payroll tax obligations may include: Social Security, Medicare, Federal Unemployment Tax (FUTA), state unemployment and disability insurance taxes, and advance payment of earned income credit for eligible employees. As an employer, you are required to remit your employee's Social Security and Medicare taxes. Fortunately, there are solutions for household payroll and employment taxes that help families keep it simple.