Nanny Tax

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Definition of 'Nanny Tax'

The Nanny Tax is a set of federal and state laws that require employers to withhold and pay taxes on wages paid to domestic workers, such as nannies, housekeepers, and personal assistants. The taxes that are withheld include federal income tax, Social Security taxes, and Medicare taxes.

The Nanny Tax is also known as the Household Employment Tax (HET). The HET is administered by the Internal Revenue Service (IRS).

The Nanny Tax applies to any person who employs a domestic worker in their home for more than 10 hours per week. The employer is responsible for withholding and paying the taxes on the wages paid to the domestic worker.

The amount of taxes that are withheld depends on the domestic worker's earnings and the employer's filing status. The employer must also pay a federal unemployment tax (FUTA) on the domestic worker's wages.

The Nanny Tax can be a complex set of laws to understand. If you are an employer of a domestic worker, it is important to understand your responsibilities under the law. You can find more information about the Nanny Tax on the IRS website.

Here are some additional details about the Nanny Tax:

* The federal income tax rate for domestic workers is the same as the rate for other employees.
* The Social Security tax rate for domestic workers is 12.4%. The employer pays 6.2% of the tax and the employee pays 6.2%.
* The Medicare tax rate for domestic workers is 2.9%. The employer pays 1.45% of the tax and the employee pays 1.45%.
* The FUTA tax rate is 6%. The employer pays the entire tax.

If you are a domestic worker, you should be aware of your rights under the Nanny Tax laws. You are entitled to receive a Form W-2 from your employer each year. The Form W-2 shows the amount of wages you earned and the amount of taxes that were withheld. You can use the Form W-2 to file your income tax return.

If you have any questions about the Nanny Tax, you can contact the IRS or your state's labor department.

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