Here is a quick breakdown: If
you paid your nanny (or any household worker) $2,000 or more in 2017, you should withhold
and pay Social Security and Medicare on all of her wages. If you paid
your nanny $1,000 or more in a quarter in 2017, you must pay
the federal unemployment tax, or FUTA. (You may also
owe state unemployment taxes.)
Generally, for 2016 and 2017,
an employer needs to pay Social Security and Medicare taxes for “cash wages” of
$2,000 or more paid to any one employee. Cash wages refer to checks, money
orders and the like. They don’t include “the value of food, lodging, clothing,
transit passes and other noncash items you give your household employee.” But
cash given to an employee in place of those items counts as cash wage.
Don’t count wages paid to your
spouse or your child under 21, the IRS says. Wages paid to your parent
typically don’t apply, either, although there are exceptions.
Don’t count wages paid to an
employee under 18 at any time during the year, unless providing household
services is “the employee’s principal occupation,” the IRS says.
(See the attached screenshot below. Click to enlarge.)
