Do you hire a nanny to take care of your children? Do you know how to arrange the tax payments by becoming your own employer? Have you ever heard about the nanny tax or the nanny tax calculator service? This article will provide you with the information about these subjects and a guide on how to use the nanny tax calculator.
Do you hire a nanny?
Families who hire nannies are considered household employers– a distinct employer classification which carries some unique nanny tax and legal obligations. Handling these obligations properly is very important for both you and your nanny. When done correctly,
1. You’ll prevent expensive and time-consuming tax & legal issues,
2. You’ll be entitled to at least one of the childcare tax breaks, and
3. Your employee will receive important short-term and long-term benefits and protections. What you need to check beforehand Establish your federal and state household employer tax accounts. Complete and file your New Hire Report. Calculate the correct amount of federal and state taxes to withhold each pay period. Track your gross pay, net pay, federal taxes withheld and state taxes withheld. Prepare your state tax returns and remit both the employer and employee taxes quarterly. Prepare your federal tax estimates four times per year and remit both the employer and employee taxes. Prepare your year-end summaries to state tax agencies. Prepare Form W-2 and distribute to your employee
(and any former employees who had wages during that calendar year). Prepare Form W-3 and file with the Social Security Administration
(along with Form W-2 Copy A). Prepare Schedule H which will accompany your personal federal income tax return. Respond to IRS and state requests/inquiries on your behalf. Monitor ever-changing household employment tax law and alert you as needed.
The Nanny tax calculator service.
A user guide
Know what to expect financially. Household employment calculators help you to estimate taxes – and tax savings – so that you can easily run scenarios and make good money management decisions. The calculator considers the following elements: - Pay settings,
- Employer tax breaks,
- Employee federal tax settings, and
- Employee state tax settings. Conclusion If you are hiring a nanny in the UK, always ensure to check the taxing procedures and you can always use the nanny calculator service to ensure that you complete the necessary requirements legitimately.