We let our nanny go early in summer 2011. I paid all the taxes---UI, federal payroll taxes.
Now she babysits for us on an ad hoc basis. Do I still have to pay payroll taxes? (I'm not asking about UI since it's smaller and I'm pretty sure she hit the annual salary limit.) It's the same employee, but arguably it's not the same job.
The nanny tax, handling the Federal, FICA, etc, for household employees is effective for those you pay more than $1700 in a year. So it's possible to hit this number with one regular sitter.
BEGIN QUOTE
Pay cash wages of $1,700 or more in 2011 to any one household employee. Do not count wages you pay to? · Your spouse, · Your child under the age of 21, · Your parent (see page 5 for an exception), or · Any employee under the age of 18 at any time in 2011 (see page 5 for an exception).
THEN you need to ...
Withhold and pay social security and Medicare taxes. · The taxes are 13.3% of cash wages. · Your employee?s share is 5.65%. (You can choose to pay it yourself and not withhold it.) · Your share is 7.65%.
IF you ...
Pay total cash wages of $1,000 or more in any calendar quarter of 2010 or 2011 to household employees. Do not count wages you pay to? · Your spouse, · Your child under the age of 21, or · Your parent.
THEN you need to ...
Pay federal unemployment tax. · The tax is usually 0.8% of cash wages. After June
30, 2011, the tax is scheduled to decrease to 0.6% of cash wages. · Wages over $7,000 a year per employee are not taxed. · You also may owe state unemployment tax.END QUOTE
Thus if you have another nanny, you likely owe unemployment tax as you will surely be paying more than $1000 to all household employees in a quarter.
Why do you say that it "arguably not the same job?"
What do you see as the difference between a nanny and a babysitter?
Your obligation will hinge on basically two things: A) WHERE she performs the babysitting? B) How much you pay her annually?
I seem to recall a very old exception to the payroll tax rules for household employers when the babysitter (or paperboy) is a minor. But I would guess that does not apply to your situation.
Gene E. Utterback, EA, RFC, ABA
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