Federal tax rate seems wrong

[ACo3]

Hello, 

I recently filled out this year's profile in Turbotax and am getting a large unexpected number for my Federal tax rate. I hired a in home nanny last year and it's saying I owe Household employment taxes of ~$3,300. This doesn't make sense since we only paid her around $14000 total. We paid state taxes (~$180 at 1.31% rate) and fed taxes ($42). TurboTax is saying we now need to pay an extra $3300 for this household employee. Can you please provide info on how to fix this? 

Thanks

[Critter-3]

Did you issue them a W-2 ?  

And you are forgetting the FICA taxes  14000 x 15.3% = 2142 

 ... the $42 FUTA tax is not the only tax.

Review the Sch H for all the taxes being calculated on the return. 

[DaveF1006]

Yes, this sounds about right. First of all FICA taxes need to be paid. These are her social security and Medicare taxes as mentioned above. 

On top of that, there are federal and state unemployment taxes. Depending on your state, you may also owe workers' compensation and/or paid family or medical leave. It can get costly when you factored in these various taxes you need to pay.

@ACo3 

[ACo3]

Let me clarify a bit more.

Yes, we issued them a W-2, but filed it a bit late. 

The ~$180 was specifically for Unemployment Insurance tax. The last paystub shows a YTD total for Employee Taxes and Deductions of ~$2370 and Employer Taxes & Deductions of ~$2020. 

Should we be expecting to have to pay another $3K in taxes? 

[RobertB4444]

Yes.

You have to pay social security and medicare for your household employee.  Plus any amount for her withholding taxes that you took out.  At a minimum that is 15.6% of her salary that you need to submit with the tax return.  15.6% of 14000 is $2184.  Plus any other associated taxes.  

@ACo3 

[ACo3]

Okay great, then we have already paid these taxes through our payroll service.

When inputting the info into TurboTax I did not see a way to indicate that I have already paid this. How can I go about signaling that this has already been paid? 

[RobertB4444]

That's because if you paid her through a payroll service then she's not a household employee.  She's an employee.  You've already filed all her taxes and paid for everything.  Why are you entering it on your tax return as well?

@ACo3 

[ACo3]

I haven't seen any indication that paying a household nanny through a payroll service removes their "household employee" status. I am trying to verify this online but haven't been able to. It makes sense, but the info isn't easy to find. Can you provide a reference to this? 

[MonikaK1]

You would only use Schedule H (Form 1040) to report household employment taxes if you paid cash wages to a household employee and the wages were subject to social security, Medicare, or FUTA taxes, or if you withheld federal income tax.

Did the payroll company you are using issue a Form W-2 and payroll tax returns? 

See the Instructions for Schedule H and this TurboTax tips article for more information.