How to file nanny tax
About the Author, Eve Davis, LTC
Eve Davis has been an Oregon Licensed tax professional since 1996. In October of 1999, she had been working as a tax preparer for 3 years when she decided to open her own practice. Right before Christmas of that same year she discovered she was pregnant with twins! In 2000 she gave birth to her own business, In or Out Tax Service Inc. and to her beautiful girls Sarah and Samantha. Taxes and twins has been her life for the last 12 years.
She is referred to at her kid’s school as the twin mom who does taxes. In or Out Tax Service Inc. is a full service accounting business located in SE Portland Oregon. They specialize in personal and business income taxes as well as payroll and bookkeeping. The company serves over 1200 clients, including hundreds of household employers. She has put her hands on experience into a do it yourself nanny tax manual available at nannytaxhelper.com. Eve also has served on the board of her local twins club for over ten years and is on the board of Portland LeTip, an international business leads organization. Eve Davis explains how she learned and became an expert helping household employers.
My profession as a Licensed Tax Consultant did not require full time hours in the summer when her twins were born so she had some time to decide on the best childcare options. Right away day care at an outside center seemed to be the most expensive way to go especially with two babies at the same time, plus it was a challenge to find two available spots. The option of a daycare provider who worked out of their home was less expensive but again it was hard to find two spots. So, I started
looking at hiring a nanny. The funny part about this option was I was hesitant because I was somewhat intimidated by the whole “nanny tax” requirements! How funny is that? An accountant intimidated by such a thing! However this really is a testament to complexity of the issue (see “Do I have to pay the nanny tax and what is it anyway? .)
At this point though, I went with another option, I got an au pair from Mexico. An au pair is basically a foreign exchange student who lives with you and provides full time childcare for a small weekly stipend that is not subject to payroll taxes. This certainly isn’t an option for everyone as you have to go though a agency to find the au pair which costs a large chunk of money up front and you have to have the room in your house for them to live but it was the perfect option for our family for 3 years. When it was time for my girls to get ready for preschool the cost of preschool and an au pair was too much for us, so I looked at hiring a part-time nanny. I was not intimidated any more by the employer tax requirements because my own business had grown and needing to hire employees I was forced to understand payroll taxes. The household tax or nanny tax issue was a natural progression. Although it has many similarities to regular employer tax requirements, there are some major differences that I became very adept at handling and have since used my experience to help others with employing household help countless times.
I believe the Nanny Tax Helper explains in easy step-by-step instructions how to set up and pay the required payroll taxes as well as how to file the required paperwork!Source: www.nannytaxhelper.com