“Not paying your nanny taxes may seem like an easy way to save some money and not have to deal with the hassles of calculating and remitting taxes. Plus, if you don’t pay nanny taxes, how is anyone going to find out? Your nanny is on board as she gets a few extra dollars in her paycheck. You’re not running for political office or being nominated for a position in government. And those are only the people who get caught not paying nanny taxes, right?
There are a number of ways to easily get caught if you don’t pay nanny taxes. Most will end up with you paying much more in fines and penalties than in the actual tax responsibility you chose to ignore.”
Our friends at GTM Payroll Services have laid it all our for you, and what can happen if you avoid Nanny Taxes.
The new year is here. What does that mean for you and your nanny?
Here are the three most important things nanny employers need to know for 2013:
- The Payroll Tax Holiday Has Expired. The social security tax has reverted to its traditional 6.2% (it was temporarily reduced to 4.2% in 2011 and 2012 in an attempt to stimulate consumer spending). The change will decrease take-home pay for all U.S. workers. Your full-time nannies will see a change of about $10-$15 per week, depending on their income level.
- The FICA Reporting Threshold Did Not Change. The $1,800 threshold has been extended through 2013. Families who pay a worker less than that amount are absolved of the FICA reporting responsibilities under the “casual babysitting exemption.”
- The Federal Mileage Reimbursement Rate Has Increased. The rate for mileage reimbursement increased by one penny per mile. It’s now 56.5 cents for each mile an employee drives on the job.