Nanny Tax HELP and W2

[ejlee051609]

I'm new to the household employer game. We didn't think we were going to have to pay taxes on our nanny since she started at the end of September, but we paid her JUST enough to have to pay taxes.

I have applied for an EIN.

I did not pay any quarterly taxes for her since we just realized we would need to pay some.

When I plug in her wages in the W2 generator in Turbo Tax it automatically calculates her SS and Medicare witholdings. But I have agreed to pay her percentage as well as our responsibility.

So I put 0 in both of these boxes right? Even though Turbo Tax is telling me that the IRS is going to send it back to me to get corrected?

What else do I need to do?

Please Help!

[RobertG]

You should enter the amounts for Social Security and Medicare tax as if you withheld them.  

You will pay those taxes when you file Schedule H, Household Employment Taxes.

There is a good example that covers your situation in the 2019 Instructions for Schedule H on page 10.  

Please see the TurboTax site: Where is IRS Schedule H? for further information.

 

[ctyates_824]

and how do I issue a W2 for my nanny? Can I use TurboTax Deluxe? Or I have to use one of the three:

-TurboTax Self-Employed?

-TurboTax Home & Business?

-TurboTax Business?

[DaveF1006]

According to the following Turbo Tax link, you would need to upgrade to Turbo Tax Self-Employed to access the Quick Employer Forms to generate your W2 for your nanny. 

Here are the navigational steps you will use.

1) log into Turbo Tax Online.Self -Employed

2) Select Federal>wages and income

3) Scroll to all income>Self Employment>self employment and expenses Select Start

4) Select yes when it asks Did you have any self-employment income or expenses?

5) Then it will ask you what type of business you are in. indicate you are a Household Employer

6) next question indicate Nanny Services continue

7)  Select I started Nanny services in 2019 or whatever the correct answer is on this screen. continue

😎 Did you pay any employees in 2019   here you will select the link that says Help me prepare W2 and 1099.  When you select this link, there will be a screen open on the right side program that says;

How do I create W-2s and 1099 forms?

You can fill out 1099-MISCs and W-2s online by going to Quick Employer Forms from TurboTax.  

Click on Quick Employer Forms link and this will guide you in preparing a W2 for your household employee. 

[AmeliesUncle]

If you have no other need for the Self Employment version, you may want to use the Social Security Administration website or a third-party website to file the W-2. 

You can do it for free on the Social Security Administration website, but it is a bit clunky. Or there are several reputable third-party websites that you can prepare, mail and e-file a W-2 for less than $5.

[ThomasM125]

It doesn't matter who is paying the employee's share of social security and medicare taxes, it still needs to be entered correctly on the W-2 form. This is because the W-2 will be filed with the social security administration and be used to credit the taxes paid to the employee's retirement account.

So, the social security tax will be 6.2% and the medicare tax will be 1.45% percent of the wages, not -0-.

[acsing]

I paid my quarterly FICA taxes directly to the IRS already for 2020 for my household nanny but when I fill out schedule H in TurboTax, it looks like it's charging me again for those taxes? Is there a way to notate in Turbotax that I've already paid those taxes and don't need to pay them again?

[PattiF]

If the amount withheld were paid to the IRS through 1040-ES payments, enter the amount of your withholding for your domestic employee in Estimates and Other Taxes Paid.

After you finish entering your information in the Nanny Tax section, go to:

• Federal Taxes >>
• Deductions & Credits >>
• I'll choose what I work on >>
• Estimates and Other Taxes Paid >>
• Estimated Tax Payments
• Federal Estimated taxes for 2020 (Form 1040-ES), click Start and enter payments on the second page

[acsing]

Thank you! This worked perfectly!

[mlmorgan76]

Hello:

I understand that there is an amount I have to pay in nanny taxes, but my nanny is also required to pay her owe taxes from wages I paid to her since I did not withhold any funds on her behalf, correct?  That is what I told her.

[CatinaT1]

Yes.  What you are paying is the employers part of Social Security and Medicare tax.  

[sdevshatwar]

Do I need to get California EIN similar to Federal EIN? And what are state level tax responsibilities because TT only covering Federal?

[DianeW777]

Yes, if you meet the requirements. Use the link below to see the requirements.

• When does a Household employer become subject to state payroll taxes? (See image below)

You can register using the information below and click the link for more information.  CA Employment Development Department (EDD)

Use e-Services for Business to register for your employer payroll tax account number. It’s fast, easy, secure, and available 24 hours a day, 7 days a week.

1. Create a username and password.
   • Go to e-Services for Business.
   • Select Enroll.
   • Enter the required information and select Continue.
   • Select the verification link in the email sent to you by the EDD to complete the enrollment process.

   Important: If you do not verify your email address within 24 hours, you will need to restart the enrollment process.

2. Log in to e-Services for Business.
   • Select New Employer.
   • Select Click here to register for Employer Payroll Tax Account Number.
   • Complete the online registration application.
   • Select Submit.

This process will create an employer payroll tax account number.

[sdevshatwar]

Thanks DianeW777 🙂

Is there any guide on my California level tax responsibilities regarding nanny payment.

I understand TurboTax has Schedule H (Household Employment Tax) which covers Federal tax responsibilities. Is there some article or form that I can use to finish my CA tax responsibilities.

[LenaH]

It depends on the wages of the nanny whether taxes are paid on a yearly or quarterly basis. 

Annual:

• Reports wages quarterly and pays taxes annually.
• Pays household wages of $20,000 or less annually and elects to be an annual Household Employer.

Quarterly:

• Reports wages quarterly and pays taxes quarterly.
• Pays household wages that exceed $20,000 annually or pays household wages of $20,000 or less annually and does not elect to be an annual Household Employer.

The amount of wages you pay in a calendar quarter will also determine the payroll taxes you are required to withhold and pay. If you pay the nanny over $1,000 a quarter, you will have to pay California SDI, unemployment insurance and employment training tax (ETT). 

For more information, please see Household Employer.

@sdevshatwar