Nanny taxes?

[lupineaura]

Hi everyone!

I'm looking for advice from anyone who has hired a nanny (and paid them above board). I'm trying to decide if a nanny is financially worth it, and therefore want to know how much I'll be paying for taxes, etc. I *think* I have the federal stuff figured out; the state taxes seem a little pricier, but we'll see. Anyway, I have two questions:

1) About how much more (% or dollar) do you pay in taxes above gross pay? I don't need someone full time, so I'll probably be paying $400/week.

2) Do you use a nanny tax prep service? I think I can figure it out myself, but I might like the peace of mind of a service. Which one do you use? It seems like SurePayroll is the least expensive, but there are a couple of bad reviews (although I'm sure I could find bad reviews anywhere).

Thanks!

[psutexan]

I don't use a tax prep service but I do have an accountant that does our personal taxes so I can as him questions if confused. It's fairly easy to do a spreadsheet to help you track weekly pay checks for your nanny. And the social security website has online access so you can create W-2/3 for your nanny.

You will have to deduct fed, state, and social security/medicare (6.2% + 1.45%) taxes from the nanny's gross pay. These amounts you will remit with your personal tax return. Additionally, you will remit the employers portion of social security/medicare taxes (another 6.2% + 1.45%).

Read Circular E on the IRS website. It is very detailed for Household Employees.