Finding helpful New Jersey nanny tax information is not always easy. That’s why we’ve combined all the state and federal tax and labor law information you’ll need. Check out the information below that HomePay is here to help with.
Checklist for New Jersey household employers
We know you’re busy! Here’s a quick “to-do” list with links to extra details below.
Beginning of employment
- Verify caregiver’s work eligibility.
- Set up EIN & state tax account(s).
- Obtain workers’ compensation insurance.
- Display employment posters.
During employment
- File returns, remit taxes and manage correspondence.
- Pay at least New Jersey minimum wage.
- Pay over time, when it applies.
- Provide New Jersey state and local required leave
Optional benefits for your employee
Ending employment
- Manage unused paid time off.
- Close down your state employment tax account(s).
- Maintain payroll records.
Beginning of employment
Verify caregiver’s work eligibility
Before your employee begins to work, you need to fill out Form I-9 to verify they’re eligible to work in the U.S. The I-9 does not get sent to any government agency but must be presented to authorities if your nanny or senior caregiver’s employment eligibility is ever questioned.
Set up EIN & state tax account(s)
You must first apply for a EIN (Employee Identification Number) with the IRS. This will be used as your unique ID with both state and federal tax authorities. Then you can open an account with your state taxing authority.
Workers’ compensation
Household employers in New Jersey are required to get coverage for workers’ compensation insurance. These policies pay for medical expenses and lost wages if an employee has a work-related injury or illness. Obtain an instant quote and purchase a policy online, or contact our partner, Clarke White, at 804-267-1210 or wcnanny@allrisks.com.
Employment posters
Families in New Jersey are required to notify their employee of their rights by sharing these state posters and local city posters.
During employment
File returns, remit taxes and manage correspondence
- File state employment tax returns throughout the year and remit state employer and employee taxes.
- Remit federal employer and employee taxes via 1040-ES estimated tax payment voucher four times each year.
- Each year-end, prepare Schedule H and file with Form 1040; prepare and distribute Form W-2 to each employee; file Form W-2 Copy A/Form W-3 with the Social Security Administration (SSA).
- Manage ongoing alerts and notices from the state (tax rates and labor law is subject to change at any time).
Minimum wage rate
The current minimum wage in New Jersey is:
- $13.73/hour (five or fewer EEs) – does NOT apply to casual babysitters.
- $15.13/hour (six or more EEs) – does NOT apply to casual babysitters.
New Jersey overtime requirements
- Live-out employees must be paid 1.5x their hourly rate for all hours worked over 40 in a workweek.
- Live-in employees are required to be paid overtime.
- Overtime is not required to be paid when work is performed on a holiday.
Paid leave
State disability leave
The New Jersey Temporary Disability Insurance Program (SDI) provides disability insurance benefits to employees who cannot work because of sickness or injury not caused by their job. The SDI Program is funded by mandatory payroll deductions from employee wages and additional taxes paid by household employers.
Paid family leave
The New Jersey Family Leave Insurance Program provides up to 6 weeks of benefits to employees who need to care for a newborn or newly adopted child, or provide care for a seriously ill family member. The program is funded by mandatory taxes withheld from your employee’s wages.
Paid sick leave
Household employers in New Jersey are required to provide up to 40 hours of paid sick time each year to their employees. Families can choose whether to offer all 40 hours upfront or accrue sick time at 1 hour for every 30 hours worked. Other details of the law families should be aware of are:
- Any unused sick time must be carried over to the next year, but employers can limit total sick usage to 40 hours per year.
- Unused sick time does not have to be paid out at termination.
- Employers can restrict usage of sick time until after 120 days of employment if they choose.
- Employers in Bloomfield, East Orange, Elizabeth, Irvington, Jersey City, Montclair, Morristown, Newark, Passaic, Paterson, and Trenton can restrict sick time usage until after 90 days of employment. Employers in Plainfield can restrict usage until after 100 days of employment.
- Employers must display and provide a notice to employees regarding their sick time rights. This notice can be found here unless you live in one of the following cities.
- Jersey City – Employers should display these two required posters in the workplace.
- Morristown – You are required to provide your employee with this notice of the details of their sick leave.
- Plainfield – Employers must provide this written notice upon hiring about sick leave.
Optional benefits for your employee
Health insurance
Families with only 1 employee can make contributions toward their employee’s health insurance premiums and treat the amount as non-taxable compensation. In this scenario, neither the employee nor the employer is required to pay any taxes on that portion of the compensation.
Families with 2 or more employees have 3 options:
- Set up an Individual Coverage Health Reimbursement Arrangement (ICHRA).
- Set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
- Purchase a policy through SHOP (Small Business Health Options Program).
Visit our health insurance page for more information about these options.
Mileage reimbursements
The current federal mileage reimbursement rate is 67 cents per mile and only covers miles driven by your employee while on the job. Miles driven commuting are not eligible for reimbursement.
Ending employment
Managing unused PTO
New Jersey household employers do not need to pay their employees for unused sick and/or vacation time.
Close down your state employment tax account(s)
The state tax agencies expect you to file timely returns for as long as your tax accounts are open — even to report $0 in wages paid.
Maintain payroll records
Household employers are required to keep wage records on file for at least three years.
The information contained in this article is general in nature, may not be applicable to your specific circumstances, and is not intended to be a substitute for or relied upon as personalized tax or legal advice.