Still confused about Home Employee (nanny) taxes...help!

[vanleeuwens]

I'm in my 3rd year as an employer of 1. Our nanny watches our 2 kids in our home for ~ 30hrs/week. I've received mixed messages when talking to people at the IRS. Essentially, I still don't know where to send quarterly estimated taxes for both myself and for my employee (I have taken responsibility for paying for both his and my tax responsibility). Historically, I have submitted payments using Form 941 via EFTPS - I now know this is not the right form and the IRS has rerouted my payments to the right account. I also now know I will need to submit a Schedule H when filing annual taxes. I just don't know where to find estimated tax vouchers for both myself and my employee and where to send them. And I don't know if the vouchers will need an associated quarterly IRS form. Any thoughts?

[BarbL]

The Form 941 is allowed if your business has other employees, and you include your nanny's taxes with those of your business employees.  If you are not self-employed or are self-employed without employees, you cannot use the Form 941.  That's why there is so much confusion about the form.  As an employer of a single person (your nanny), you will not go the 941 route.

Instead, you will use EFTPS and make the payments as an individual, selecting Form 1040 as the applicable form.  You do not need to designate how much is your quarterly estimate and how much is for your employee; it all goes into the same bucket and will be applied correctly when you file your tax return.  There are no quarterly reports to file.

When January rolls around, you will issue a W-2 to your nanny (showing the breakdown of all the taxes you have paid on his/her behalf.  You will also file the W-3 form with the IRS, which is the summary of all your W-2 forms. (In your case, the W-3 and W-2 will contain identical information.)

Next, you will prepare your tax return, which is when the "bucket" of money gets allocated.  Schedule H will calculate how much tax was due for the entire year on the wages paid to your nanny.  It will take that amount and add it to your tax owed on Line 60a of your 1040 form (this is why you select 1040 when using EFTPS).  The quarterly estimates you paid will be applied on Line 65.  If your estimates and payments were accurate, you should be left with $0 due, and the proper reporting will be complete.

Note: The line numbers mentioned above will be different in 2018 with the tax law changes; those listed above are for 2017.

[vanleeuwens]

Thank you for your help! I've just submitted application for an individual EFTPS (instead of my business one) and look forward to continuing with federal taxes per your instructions.

[alibghrn-nanny-question]

thank you for the description. I was really confused what to do.  I am going to pay my nanny's social security and Medicare taxes. When I want to enroll in EFTPS as an individual, it asks for tax payer SSN and name. Is this my SSN or my nanny's SSN? 

Thanks,

[BarbL]

You will register using your SSN.  Any payments you make will be applied to your individual account, to cover the 'nanny taxes' calculated on your Schedule H.  

[thehewstons]

I've recently hired a nanny and have enrolled in EFTPS using an EIN I obtained from the IRS. When I try to remit my taxes, it doesn't offer a 1040ES as an option. I have tried to enroll 4 times as an individual with my SSN, but every time I get a "mismatch" letter from EFTPS saying what I've entered doesn't match the IRS. I want to remit the taxes as you've suggested using a 1040ES (because I have no other business or employees), but it seems it's not possible to enroll as both an individual AND with the EIN. What am I doing wrong? Any other suggestions? Should I have enrolled in EFTPS as an individual before obtaining an EIN? 

[AbhayBhargava]

Please refer to IRS publication 926.  It does say that you should get employer identification number.  Table 2 checklist form the publication is below.

Table 2. Household Employer's Checklist

You may need to do the following things when you have a household employee.

When you hire a household employee:	□ Find out if the person can legally work in the United States. □ Find out if you need to withhold and pay federal taxes. □ Find out if you need to withhold and pay state taxes.
When you pay your household employee:	□ Withhold social security and Medicare taxes. □ Withhold federal income tax. □ Decide how you will make tax payments. □ Keep records.
By February 2, 2026:	□ Get an employer identification number (EIN). □ Give your employee Copies B, C, and 2 of Form W-2, Wage and Tax Statement. □ Send Copy A of Form W-2 with Form W-3 to the SSA. Don't send Form W-2 to the SSA if you didn't withhold federal income tax and the social security and Medicare wages were below $2,800 for 2025.
By April 15, 2026:	□ File Schedule H (Form 1040) with your 2025 federal income tax return (Form 1040, 1040-SR, 1040-SS, 1040-NR, or 1041). If you don't have to file a return, file Schedule H by itself.