Paying a nanny
 

(It's cheaper than the local childcare chains)

I thought I started off correctly but the nanny's hubby sent me a handwritten note. Uh oh. She started working for us in January 2014, ie only 4-5 weeks ago. He wants a W-2 but from what I can understand the W-2 tells the IRS what I paid her last year (which was nothing because she wasn't employed!). I've been paying her weekly, giving a payslip from a nanny website template, withholding taxes etc. I also should have filed it last week.

To be honest, I find some of the statements on the IRS website a bit confusing, not being financially minded at all personally. It doesn't help when other websites just repeat the same information parrot style!

So, nanny 101. What should I have done, and what do I need to do to continue to pay her correctly? Yes, we've done the "authorized to work" verification. Many thanks.

Re: Paying a nanny
 

Can't help you I'm afraid Geoff but welcome back! :wave:

Re: Paying a nanny
 

Does he mean a W-2, or do you think he may be confused and is wanting a W-4 to adjust her withholdings?

Re: Paying a nanny
 

If she didn't work for you in 2013, I am pretty sure you don't need to issue her a W-2 until January 2015.

Re: Paying a nanny
 

No, there's no reason to issue anyone a W-2 if they did not work for you in the tax year (2013). If they're asking for a W-4, they can access it and download the completed copy from this link: http://www.irs.gov/pub/irs-pdf/fw4.pdf Then they'll simply hand you the completed copy. If there are any adjustments to make to withholding, do the adjustments. You'll give her a W-2 for the wages and withholding that you did in 2014 in January 2015.

Re: Paying a nanny
 

How much do you pay her? (If you don't mind me asking)

We are 2 months away from the arrival of our first child and are looking at options for childcare. Thanks

Re: Paying a nanny
 

Surprised you're going the W2 route and not the 1099 contractor, putting all the burden of tax on her shoulders tbh...

But yeah, W2's won't be till next year, so must be a misunderstanding.

Re: Paying a nanny
 

I was thinking the same.

Rene

Re: Paying a nanny
 

W2 will be a 2015 issue, a year end statement of earnings.

Re: Paying a nanny
 

A nanny is considered to be a household employee and thus the employer is supposed to pay ss and Medicare taxes, and not treat the person as a 1099 contractor.

Re: Paying a nanny
 

Not something I have looked at but I always assumed many were paid under the table, there are tax deductions for child care however.

Quite where the division between a nanny and child carer is who would not be an employee I do not know but presumably it is fudgeable.

Re: Paying a nanny
 

It's actually fairly clear legally, though a given case may be hard to decide. http://www.ftmn.com/Employee.html

Re: Paying a nanny
 

If someone were a nanny for 20 years, and no one paid in SS and Medicare, think what would happen when said employee became SS eligible. There would be 20 years of blank years, and little or no SS check. It might seem easy to fudge and pay under the table at the time, but it would hurt the nanny in the long run. :frown:

Re: Paying a nanny
 

I was in the Post Office last year?, sort of a local hangout.

So a lady I know was going on about how somebody else I know was looking for staff for his shop and was paying cash.

She was making the same comment but sounded more like she had been happy to take such payments for 30 odd years....

Re: Paying a nanny
 

If it was me I'd say I've been living off my husband for the last 20 years. Well. I can dream...