The Nanny Tax law that is implemented in the United States is a serious provision that requires strict compliance. Just like any other occupation, employment taxes also apply for people who work for your homes, particularly nannies. Some people try to find loopholes in this provision to avoid the extra charges for tax. However, the government calls for rigid implementation to ensure that all bases are covered.

When it comes to tax laws, nannies are not just the individuals who take care of your children. Other people whom you have employed to work in your home also fall in this category. Hence, other household employees like babysitter, house cleaner, laundry woman, gardeners, personal nurses and even in-house health care provider fall in this category too. So long as they take orders from you when it comes to their day to day tasks around the house, they accomplish it and they get paid for doing the assigned duties, they are considered as your home employees. Because of that, you need to settle the nanny taxes too. This provision is supported by the IRS Publication 926.

The provisions from the Internal Revenue Services has made clear cut stipulation when it comes to nanny taxes. If you pay your household employee more than $1,700 within a calendar year, it is necessary to pay FICA or Federal Insurance Contributions Act taxes. This sums up to 15.3 percent and it includes Social Security and Medicare taxes. The 15.3 FICA tax is divided between you and the employee wherein you have to settle 7.65 percent, while the remaining 7.65 percent is contributed by your employee. On top of this, you would also need to settle the FUTA or Federal Unemployment Tax Act if your household employee earns more than $1,000 in a span of 3 months.

Certain exemptions to the nanny tax law should also be observed. The nanny taxes do not apply if you are paying a family member or relative to have household duties done. It means that even if you are giving salary to your mother, father, uncle or child who is under 21 years old for doing chores, you no longer have to worry about taxes. Aside from that, minors who are under 18 years of age cancel out the tax too. For example, if you are hiring a minor to mow the lawn as a summer job, this is no longer covered by nanny tax laws.

One of the common misconceptions when it comes to nanny laws is when a person seeks for services that are not conducted within his/her own home. For example, a mother pays for a nanny to take care of her baby eight hours a day but it is not done within the house. The mom brings her baby to the nanny’s place during the day and picks her up after work hours. This cancels out the provisions of the nanny tax.

It has to be noted that household employees need to have legal approval for employment. For them to be qualified for the taxes, they need to have proper United States government approval to work in the country. Hiring an illegal US resident does not only have serious legal consequences for the employee. It also has negative repercussions on the employer.

Avoiding the problems that may arise due to unsettled nanny taxes can be easily resolved by filing proper documents. It is best to comply with the tax laws rather than face the consequences in the future.

Seomul Evans is SEO services consultant and content writer for leading IRS Defense Dallas. Visit the site to know more about Dallas Income Tax Attorney.

Seomul Evans is SEO services consultant and content writer for leading Dallas Tax Attorney http://www.myirsteam.com/ http://www.myirsteam.com/our-firm/dallas-tax-attorneys

Author Bio: Seomul Evans is SEO services consultant and content writer for leading IRS Defense Dallas. Visit the site to know more about Dallas Income Tax Attorney.

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