Don't Wait Until Tax Season to Handle Your Nanny Taxes

Every year, we talk to a lot of household employers who are facing expensive tax and legal problems for failure to handle their household employment taxes correctly. The vast majority of those problems are easy to avoid -- if you address payroll at the time of hire. Unfortunately, many families wrongly assume they can just take care of it during year-end or hand it over to their tax professional in April.

What's the problem with that approach? While it is legally permissible to remit the federal household employment taxes with your income tax return next April, there are state filing requirements that cannot be put off until next April. Most states require that employment tax returns be filed quarterly -- and some have monthly requirements. Waiting until next April will trigger late filing penalties and interest charges from your state. (In addition, you may incur underpayment penalties on the federal taxes if the amount owed takes you out of the IRS "safe harbor").

Finally, there are important labor law requirements that, if not handled correctly from the outset, can create liabilities for families. That's why we take the time to guide families through things like Form I-9, workers' compensation insurance, disability insurance, overtime and other state-specific requirements.

Give us a call and let our New Employer Orientation team help you make a problem-free, stress-free hire. When it comes to the tax and legal aspects of being a household employer, an ounce of prevention is definitely worth a pound of cure.