It's mid-January, which means the nanny tax is again on my mind. First, it's a likely time for people to hire a new babysitter, with those New Year's resolutions for a regular date night or to job hunt. And once you hire someone on a regular basis -- paying more than $35 a week -- you're most likely going to fall under the nanny tax rules. In short, if you pay cash wages of more than $1,800 to a household employee in 2012, you must pay Social Security and Medicare taxes.
Second, if you already have a regular sitter, this is the month you must fill out the nanny tax forms and send her the W-2 form that she will file with her personal income tax returns. It's not that complicated, but it does require a few hours of quiet with a calculator and your financial records. If you don't already have an employer tax identification number, it's easy enough to get one from the IRS.
Are you following the rules for paying the nanny tax? Wouldn't you rather know that you're doing the right thing, rather than skirting the letter of the law? Please share your thoughts in the comment section.
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