What is a Nanny tax?
Nanny tax is the informal term for the Social Security, Medicare, and federal unemployment tax obligations that arise when an individual pays $2,700 or more in cash wages to a household employee during the 2025 tax year. Both employer and employee share Social Security and Medicare taxes at 7.65% each. Federal unemployment tax applies when wages in any quarter reach $1,000. Household employers report these taxes on Schedule H attached to their personal Form 1040. Child & dependent tax credits can reduce the net cost of employing a qualifying care provider.
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