TurboTax has really created an issue for us on this--two years in a row. I've received wildly varied responses from TurboTax employees from don't report it to sideways fixes that don't really make sense.
Please fix this Turbotax. This is certainly a common situation (paying a nanny or other household help) and the system you have helped create to report it is upside down and backwards. Find a way to account for already withheld/paid taxes and a way to clearly and easily input that into Turbotax. Train folks on how to teach people to do this. Fix your software.
There is a screen to clearly input the taxes you paid to your nanny. This is a screen you will navigate to report this information. Unless there is another issue involved, I am not seeing your dilemma because this is very clear. Here is the screen where you report this.
Thanks Dave---but this yields incorrect results, to the point that I got an exceptionally larger refund from the IRS last year. Also, 3 separate Turbo Tax employees gave incorrect advice, including one who just suggested completely leaving it out. Another last year saying "Taxes are an art."