Nanny Help! Forgive me if this topic has been brought up before..

[bcafe]

Hi, we are looking at a potential nanny for our 21mth DD and soon (March) to be baby. DH has been a SAHD since Eva was born, and will soon be returning back to work. We are going to do a credit check and background check on her, but what are the tax implications? I know we need to pay "nanny tax", but should we get an accountant, or is it easily done by ourselves? I was thinking of setting up a separate bank account to deposit her withholdings, and then pay them quarterly. Does that make sense? She is asking $300/wk, but I am wondering if she realizes taxes will be withheld? Does that salary sound like something nannies are getting? We found her through a private ad. Oh, we live near Milwaukee in a small city around 30,000.
Thanks for any knowledge and/or advice!
Betsy

[Momof3Labs]

We've looked into nannies before but haven't actually hired one. I suspect that your nanny wants $300/week in her pocket, and you have to set aside taxes on top of that. That's the way it often works, I think.

That sounds very reasonable for caring for two children in your house - it's much, much cheaper than day care for them! Around here (Chicago suburbs), nannies get much more, I think. Like $10-12 and up per hour (net of taxes).

[loewymartin]

I'm in a completely different market, but the $10-$14/hour gross is what I hear around here. We use Nannypay for the payments/check register. It allows you to enter your information and figures out the State and Federal tax information. In NY I file quarterly with the State and send in the federal taxes annually. You will need a Federal ID number (which in NY translated into my state ID number). The first quarter is the hardest - but then it gets much easier!

And, I do all of my own taxes. I use Turbo Tax and it asks you all about that information as well, so I haven't had a problem (using both that and NannyPay for over 2 years!)

ETA: I've heard that many nannies don't realize taxes are going to be taken out. Sometimes they are on disability and receiving disability checks and if they are legally "hired" and have a job they can't continue to receive those checks. So I would double check with her that she realizes you will be doing all of this "above the table" and you will be not only withholding her taxes you will be paying your employer taxes as well.

Michelle - Mom to Alia born 5/16/02

[bcafe]

Thanks! We actually use tax software too. Can't remember off the top of my head if it's Turbo Tax or Tax Cut...but they are so helpful with all situations. I will check into Nanny Pay too. We are having a meeting with her this weekend, so will nail down specifics there. Thanks again,
Betsy