Unlike nannies who are hired to care for the children through their school age years, newborn care specialists (NBCS) or nannies that are hired only to work in a home during the baby stage are often only on a ‘short-term assignment.’ These types of positions may range from several weeks to several months. Because of this, it may seem confusing on how your nanny should be paid. Here are some important details to remember when it comes to paying your short-term NBCS’s wages and taxes.
If you pay your NBCS more than $2,400 in a year, then both the employee and you as the employer are required to pay taxes. As the employer, you can withhold the proper portion of Social Security and Medicare taxes from each paycheck and pay it on the employee’s behalf. You are also required to pay unemployment taxes for the employee.
The NBCS is required to pay income taxes on the wages they have earned during their employment with you. The employer can withhold these taxes, but if they don’t, then you will need to budget for this and pay it when you file your taxes each year.
If the NBCS does not earn more than $2,400 then no social security or Medicare taxes are required. However, income taxes on wages are still required to be paid.
Keep in mind that a NBCS that works in your home is not an independent contractor. They are an employee that needs to fill out a W-2. Independent contractors are considered self-employed and can designate their own hours, complete their job duties how and when they want, and are responsible for their own taxes.
Families that are working with a nanny or NBCS for the first time may find it convenient to partner with a household payroll agency. These tax and payroll experts understand the inner-workings of tax laws and what the required withholdings are for household employees. We partner with agencies like this and can help suggest some options once you have found the right person to begin work in your home.
Contact us today to start the hiring process. We look forward to finding a great match!