Nanny Tax Timeline: What to Do When

Surprise! January is tax deadline for nannies and families. But here is everything you need to do throughout the year.

nanny tax timeline

Hiring a nanny often lifts a huge burden off your shoulders. You have someone reliable and likeable to care for your children when you are not there, and your family life becomes a little more settled.

And having her taxes in line is another huge relief. Knowing you're doing everything ethically and legally can also help you sleep at night.

Many people don't know that nannies aren't considered independent contractors in the eyes of the IRS. Read our article about why they are classified as household employees »

Having a household employee does mean a little extra paperwork to make sure all the taxes are paid on time and correctly. After the rush of hiring is over, you'll settle into a routine of federal and state tax payments that will soon be as habitual as paying your own taxes.

To help you keep track of everything, we asked Stephanie Breedlove, VP of Care.com HomePay, to give us pointers on establishing a schedule for your nanny taxes, including the quarterly taxes that will prevent any underpayment penalties.

We put together this handy month-by-month guide to make sure you don't miss a thing. Keep this chart posted to remind you of your monthly tasks.

When You Hire
No matter what month you hire a nanny, you need to take care of a three things during that month and not wait until tax time.

  1. Eligibility. First, make sure your employee is able to legally work in the United States. Have your nanny fill out an I-9 form, an employee eligibility verification form that shows they are able to legally work in the United States. She also needs to complete a W-4 form to choose her income tax withholding selection.

  2. File a report. File a new hire report with your state's new hire registry. According to the IRS, most states accept a completed W-4 form for registration purposes. You generally have 7 to 14 days to file this form, said Breedlove.

    Tip: Download your state forms from your state's official website and your federal forms from IRS.gov/Forms&Pubs.

  3. Become a household employer. You need to establish yourself as a household employer, said Breedlove, so you must file all the paperwork that goes with that. In most states, you will need to set up two state tax identification numbers and one tax number with the IRS. The two state numbers are for state unemployment insurance and state income taxes withheld from your employee's pay. The federal government requires a federal employment identification number (FEIN or EIN).

Your Month-by-Month Nanny Tax Plan

January

15 File Form 1040-ES.The fourth installment of last year's federal Social Security and Medicare taxes(employer and employee portions), the federal unemployment tax (FUTA) and any federal income taxes withheld from your employee's pay are due today.

31 Start the year off right by assembling Copies B, C and 2 of Form W-2, Wage and Tax statement and preparing them for your nanny.

31 Quarterly state income and unemployment taxes are due no later than today for the quarter that ended on December 31. (Some states require filing by January 15 -- check your state's website for forms and dates.)

February

15 Ask for a new Form W-4, Employee's Withholding Allowance Certificate, from each employee who claimed exemption from income tax withholding last year.

28 File Copy A of Form W-2 (or W-3 if you have more than one employee) to the Social Security Administration (if filing electronically, you have until April 1).

March

Stay on track this month and be sure to check updates to labor laws and tax rates so you continue to file accurate returns. This is a good time to assemble a file with your employee's information (including address, social security number,marital status, dates of employment, etc.) and your employer identification number.

April

1 File Copy A of Form W-2 electronically with the Social Security Administration by today.

15 State and federal income tax returns are due today. File Schedule H (Form 1040), Household Employment Taxes, with your federal income tax return (Form 1040, 1040NR, 1040-SS, or Form 1041). If you do not have to file a return, file Schedule H by itself. The Schedule H lists all the wages paid to your employees. You also need to file the annual FUTA (Federal Unemployment Tax Act) taxes with the 1040 (but we know you have been keeping up with quarterly payments all along!).

15 File Form 1040-ES. The first-quarter installment of current year's federal Social Security and Medicare taxes (employer and employee portions), the federal unemployment tax (FUTA) and any federal income taxes withheld from your employee's pay are due today.

30 Quarterly state income and unemployment taxes are due no later than today for the quarter that ended on March 30. (The deadline is earlier in some states -- check your state's website for forms and dates.)

May

Nothing is due this month, but stay on track and check updates to labor laws and tax rates so you continue to file accurate returns.

June

15 File Form 1040-ES. The second-quarter installment of current year's federal Social Security and Medicare taxes (employer and employee portions), the federal unemployment tax (FUTA) and any federal income taxes withheld from your employee's pay are due today.

July

31 Quarterly state income and unemployment taxes are due no later than today for the quarter that ended on June 30. (The deadline is earlier in some states -- check your state's website for forms and dates.)

August

Another filing free month! Track those changes to labor laws and tax rates so you continue to file accurate returns.

September

15 File Form 1040-ES. The third-quarter installment of current year's federal Social Security and Medicare taxes (employer and employee portions), the federal unemployment tax (FUTA), and any federal income taxes withheld from your employee's pay are due today.

October

31 Quarterly state income and unemployment taxes are due no later than today for the quarter that ended on September 30. (The deadline is earlier in some states -- check your state's website for forms and dates.)

November

30 If your nanny's marital status has changed in the past year, or if she plans to change her withholding allowance in the coming year, remind her to submit a new Form W-4 by today.

December

Enjoy the deadline-free month to organize end-of-year paperwork and catch up on any tax and legal changes. Begin next year's tax folder so you have a fresh start.

Taxes are one place where being organized will pay off in a big way. On-time payments will keep you from having to pay unnecessary fees or penalties and you will gain peace of mind when you know you are filing correctly.

Your Next Steps:

* The tax information contained in this article should not be used for any actual nanny relationship without the advice and guidance of a professional tax advisor who is familiar with all the relevant facts. The information contained herein is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for your specific circumstances and may require consideration of other matters.

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    Comments (4)
    Photo of Stephanie B.
    Stephanie B.
    Hi Rachael!

    When you send in your 1040-ES forms, you'll use your Social Security Number. This is because your federal tax liability as a household employer is reconciled through your personal income tax return via Schedule H. So as long as the IRS has your SSN, you're good to go.
    Posted: April 11, 2014 at 11:10 AM
    Rachael
    When filing the 1040-ES each quarter, should I use my social security number, or the EIN I applied for as a household employer?
    Posted: April 10, 2014 at 10:33 AM
    Photo of Stephanie B.
    Stephanie B.
    Hi Alison!

    My name is Stephanie Breedlove and I'm the VP of Care.com HomePay. The 1040-ES schedule isn't quite quarterly. For 2014, here's how it breaks down:

    1040-ES #1 is for taxes accrued in Jan, Feb & March
    1040-ES #2 is for taxes accrued in Apr & May
    1040-ES #3 is for taxes accrued in June, July & Aug
    1040-ES #4 is for taxes accrued in Sept, Oct, Nov & Dec

    You'll only send in 1 form and it includes both halves of Social Security & Medicare, the federal income taxes you withheld from your employee, and the federal unemployment insurance taxes (FUTA) you owe.
    Posted: March 31, 2014 at 12:32 PM
    Alison S
    When filling out the 1040-ES form each quarter, do we submit one for us (the employer with the 7.65% of taxable wages for SSA and Medicare, an additional form for the employee (with her information?) for the other 7.65% for SSA and Medicare plus her Federal income tax withholding? What forms do we fill out to submit FUTA?
    Posted: March 29, 2014 at 12:47 AM
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