Household Employment Tax and Nanny Payroll

Good Purpose 8:28 Nannies & Sitters wants your family to have peace of mind as you hire your qualified Nanny and recommends taking the guess work out of household employment tax and Nanny payroll. We have provided links below to two of the most highly utilized and recommended Nanny tax and payroll solution companies. They both provide valuable information and resources even if you do not utilize their services.

Nanny Tax and Payroll for Households | GTM Payroll Services

 

Nanny Taxes Made Simple | HomeWork Solutions

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Responsibility as an Employer

As a household employer, if you pay cash wages of $2,300 or more in 2021 (or $2,200 in 2020) to your employee, you must withhold Social Security and Medicare taxes. Employers are not required to withhold Federal and State income taxes unless it is agreed upon by both parties. If income taxes are not withheld throughout the year, your nanny will be responsible for paying them at the end of the year. If you pay a total of $1,000 or more per quarter to a household employee you must pay federal unemployment tax. This does not apply if your household employee is your spouse, child under age 21, parent, or any employee under the age of 18 at any time in the current tax year.

Nannies are not independent contractors, but employees of the families they serve. An employee is a person who takes instruction from the employer, has a schedule set by the employer, and uses tools and equipment provided by the employer. An independent contractor is a person who works under their own conditions, sets their own schedule, and uses their own supplies. Most nannies who work in an employer’s home, whether it be on a temporary or full-time basis, are considered household employees, not independent contractors, because they work under the family’s control and have their schedule and pay set by the family. In the past, the IRS has made determinations that caregivers are considered employees and it is illegal for a family to treat them as independent contractors.

Not paying payroll taxes could result in hefty fines and penalties, and possible legal action by your employee. Please utilize the services and free resources found on Nanny Tax and Payroll for Households | GTM Payroll Services or Nanny Taxes Made Simple | HomeWork Solutions which both provide free Nanny tax calculators and guides on how to file taxes correctly on your own.

Sample Nanny Agreement

 

This Nanny Agreement is entered on between the hiring family (herein known as Family) and the childcare provider ____________ (herein referred to as Nanny).

Whereas the Family requires the services of Nanny to take care of their child(ren), and

Whereas the Nanny agrees to enter into an agreement to take care of the child(ren),

This Nanny Agreement is entered between the Family and the Nanny on the terms and conditions

set forth below:

1. WORK HOURS AND DATES:

Nanny agrees to work a standard time frame of ______ hours per week that shall be referred to

hereafter as a standard work week.

2. COMPENSATION:

Nanny shall receive a salary of $_____ per week. The Family will issue payment every other

Friday. The Family agrees to pay the Nanny an hourly rate of $_____ for all time worked over the

standard work-week hours indicated above.

Nanny shall reside at the Family’s home and Family will cover room and board related expenses.

3. TERMINATION OF EMPLOYMENT:

Nanny is an at will employee and may choose to work for the Family for as little or as long as

Nanny desires. Likewise, the Family may continue the Nanny’s employment for as little or as long

as they wish. However, both parties agree to provide __________notice of intent to terminate this

agreement (or pay in lieu of such notice), except when such termination is for cause.

4. TERMINATION FOR CAUSE:

Immediate termination without any notice is possible on the following grounds:

– Allowing the child(ren)s safety to be compromised

– Inconsistent or nonperformance of agreed upon job responsibilities

– Dishonesty or lying to Family

– Stealing

– Misuse of Family automobile

– Breach of confidentiality clause

– Persistent tardiness of more than 15 minutes without valid reason

– Unapproved guests

– Smoking or consumption of alcohol while on duty

– Illegal drug use

– Failure of the Family to remit payment for more than 1 month

– Fear of harm or threat by either party due to actions of the other party

5. JOB RESPONSIBILITIES:

Nanny agrees to perform the following duties as a requirement of employment:

Put the absolute safety of the child(ren) first before all other responsibilities.

Tend to child(ren)’s basic needs such as bathing, dressing, changing diapers, brushing teeth, and

afternoon naps. Administer medicine to child(ren) as directed by Family.

Prepare meals for child(ren) during scheduled hours; clean up kitchen and dining table when

completed. Participate and supervise activities with child(ren), which would include: games, walks, play dates,

playground outings and reading to children daily. Keep the child(ren)’s bedrooms and play area clean and organized, which includes making the

beds, vacuuming carpet, cleaning and disinfecting toys, etc. Grant access to home for service personnel – i.e., cable/telephone repairman, pest control,

package delivery, housekeeping and maid services, etc.

7. VACATION/SICK PAY/HOLIDAYS:

Nanny shall receive the following paid holidays: New Year’s Day, Memorial Day, Independence

Day, Labor Day, Thanksgiving Day and Christmas Day. If any of the above holidays occur on a

weekend, Nanny will be given the official Federal holiday that is observed. The Nanny is provided

a cumulative of 7 days of vacation, sick days and personal time as used according to the Nanny’s

discretion. Nanny agrees to use best efforts to take vacation time when Family takes their

vacation. If Nanny cannot coordinate this vacation schedule, Nanny agrees to give Family at least

four (4) weeks notice. In the event that Nanny travels with Family, Nanny shall be paid her regular

salary plus over time hours as previously agreed upon by Family and Nanny.

Nanny agrees to use best efforts to give Family at least twelve (12) hours notice before being

absent due to illness. Nanny understands Family does not provide medical insurance. If Nanny

takes un-accrued vacation or sick days off, it is at the Family’s discretion to allow the hours to be

made up in the future or deducted from the Nanny’s check. Accrued but un-used vacation and

sick pay shall be paid at the Nanny’s standard compensation rates at the termination of Nanny’s

employment.

8. CONFIDENTIALITY:

Nanny understands that any and all private information obtained about Family during the course of

employment, including but not limited to medical, financial, legal, career and Family’s assets are

strictly confidential and may not be disclosed to any third party for any reason. Nanny is prohibited

from providing information or posting photos of the Family or their home without prior consent.

The obligations of the Nanny under this clause survive termination of this Agreement.

9. GENERAL PROVISIONS:

Nanny understands Family has a smoke free home and that smoking by Nanny or Nanny’s guests

is never permitted in the home. Nanny agrees never to smoke while providing childcare to Family’s

child(ren) even on walks, trips to playground, outside activities or field trips.

All guests must be pre-approved by Family before being allowed entrance into Family’s home.

Alcohol consumption is never permitted while Nanny is on duty.

Nanny hereby certifies that Nanny does not use illegal drugs and understands that such use is

cause for immediate termination.

Nanny agrees to limit personal calls to 15 minutes or less while on duty.

The Nanny agrees to be certified if not already certified in child CPR and First Aid.

At time of termination, and prior to receipt of final paycheck, Nanny agrees to return to the Family

all Family property, including but not limited to house keys.

10. AGREEMENT

The Parties hereby agrees to be fully bound to the terms of this Agreement. This Agreement is

executed on ___________.

 

 

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Client/parent

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Client/parent

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Nanny

TBD