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Question:


I have a part-time nanny for my children. Do I need to prepare some type of tax form for her, such as a 1099?
-MotherGoose2014


Answer:


Did you say “form,” singular? You probably will have to fill out forms, plural, and you may have to pay taxes, too. If you paid your nanny $1,800 or more last year, you’ll need to send Schedule H of Form 1040 (good thing there are only 26 letters in the alphabet, right?) to the Internal Revenue Service. How you fill in the blanks and where you go from there depends on whether your nanny is your employee or an independent contractor. That distinction is often hard to make, but it’s based on how much control someone has in how a worker’s duties are performed. Chances are the IRS will consider your nanny an employee, and that’s bad news for you.

As an employer, you’ll have to pay Social Security and Medicare taxes for your nanny totaling 7.65 percent of her wages, and you’ll have to withhold an equal amount from her pay as the employee’s share. You may have to pay or withhold additional amounts for federal and state unemployment contributions and a state disability fund. As an employer, you also must prepare a W-2 form and provide it to her by the end of January for the previous year and to the Social Security Administration a month later, and there may be additional forms to file with tax and labor authorities in your state.

There’s one more form, I-9, which you use to verify that your nanny is eligible to work in the United States. That one isn’t sent anywhere; you just keep it for your records. Your nanny, if she’s your employee, also needs to fill out a W-4 so that she can tell you how much of her pay she wants withheld for income taxes. If your nanny can be considered an independent contractor, then there are more forms for her and fewer for you. She’ll have to fill out a W-9, on which she formally gives you her Social Security number. You’ll have to file a 1099-MISC information return to the IRS and to her to report how much you paid her. The good news is that you’ll be off the hook for Social Security and Medicare taxes.

-Conrad de Aenlle



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