In addition, although the new law substantially reduces federal paperwork, employers must still grapple with the copious and confusing state forms and filing requirements. The amount of paperwork varies based on where you live and how much you pay. Generally, though, anyone who has a full-time nanny, housekeeper or, in some cases, gardener, needs to file state income and unemployment tax forms too.
The Changes in Baby-Sitting Taxes
How does the new nanny tax law differ from previous law?
* Old law: Social Security and Medicare taxes must be paid for any domestic worker who earns more than $50 in three months.
* New law: Social Security and Medicare taxes must be paid for any adult employee who earns more than $1,000 annually.
* Old law: Even high school baby-sitters are considered employees, required to pay Social Security and Medicare taxes.
* New law: Part-time teen-age workers are exempted from filing and tax requirements. Only adults, over the age of 18, or those whose primary occupation is domestic work must pay the tax.