1. What is the Nanny Tax?

The "Nanny Tax" refers to the FICA (Social Security and Medicare) taxes that households must pay when they employ domestic workers, such as nannies, if they pay them more than a certain threshold amount annually.

2. How Does the Calculator Work?

The calculator uses the FICA tax formula:

Where:

• \( Wages \) — Total wages paid to domestic worker (USD)
• \( 0.0765 \) — FICA tax rate (6.2% for Social Security + 1.45% for Medicare)

Explanation: This calculation represents the employer's portion of FICA taxes for domestic workers. The employee also contributes an equal amount.

3. Importance of Nanny Tax Calculation

Details: Properly calculating and paying nanny taxes ensures compliance with IRS regulations, avoids penalties, and provides Social Security and Medicare benefits for your employee.

4. Using the Calculator

Tips: Enter the total wages paid to your domestic worker in USD. The calculator will compute the FICA tax amount you owe as the employer.

5. Frequently Asked Questions (FAQ)

Q1: What is the threshold for paying nanny taxes?
A: For 2025, you must pay nanny taxes if you pay a domestic worker $2,600 or more in a calendar year.

Q2: Are there state requirements in addition to federal?
A: Yes, many states have additional requirements for domestic workers, including unemployment insurance and state disability insurance.

Q3: What forms are required for nanny taxes?
A: Typically, you'll need to file Schedule H with your personal tax return and provide your employee with a W-2 form.

Q4: Does this include federal unemployment tax?
A: No, this calculator only computes FICA taxes. FUTA tax may apply if you pay wages of $1,000 or more in any calendar quarter.

Q5: Can I deduct nanny taxes as a business expense?
A: If you're paying nanny taxes for childcare while you work, you may be eligible for tax credits, but consult a tax professional for specific advice.