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Has to be W2. You may be eligible for credit depending on your income level that would cover the taxes you have to pay.
Meaning the credit would potentially offset some of the cost of the taxes if you are eligible for it
https://www.irs.gov/taxtopics/tc602
Thanks for sharing this p1
Please dont take P2’s advice. Hiring a nanny makes you a “Household Employer” and your nanny a W-2 employee. So you have to get Federal Employer Identification number (EIN) and state. You have to do all taxes and run payroll and file quarterly taxes and do witholdings etc.
I have done this for 4 years now - DM if you need more advice.
Sure
Nanny should be on a w2 and not on 1099. Please make sure of that
https://www.care.com/hp/nanny-tax-guide/amp
Pro
Yes you can do a 1099. That makes them an independent contractor. I doubt your nanny is an ‘employee’ as such. Just make sure you talk to them and let them know you will give them a 1099. That way they will owe their fica taxes themselves.
Ps. Even if you paid other Nannies in cash they are still required to file taxes on that payment. For eg when you tip cash, the person is required by law to report cash tips.
Pro
All: ignore my comment above clearly I f**ed up. Sorry Op.
please all ignore!
Why can't nanny form her own company and send you invoice and you pay her. It seems lot of Hassel to do all the paperwork to give them employment
Thanks EY1. How much do you pay Poppins monthly?
Are there any software/programs that you know that would let me do this myself?
I use poppins payroll to manage this. They’ve been very easy to use so far (started in Jan). They filed for an EIN (employer ID number) for me and they take care of her payroll. She has chosen to not withhold any tax, so she only gets the deduction for FICA. At the end of every quarter I’ll have to make my FICA contribution as well as any other employer taxes (not sure what those will be). But poppins will take care of everything including managing documentation etc.
Thanks for sharing!!