Forms 1099 and the Nanny Tax - Who should NOT issue Forms 1099 to health care workers


The so called Nanny tax is nothing more than payroll tax applicable to non-business employers.  A non-business employer is typically an individual who hires another to perform services most often in a residential location.

Contrary to a common misconception, Forms 1099 are not issued by non-business entities to report wages subject to the Nanny tax. 

If you employ someone in your home, you should apply for an identification number with the IRS to establish yourself as an "employer."  It is possible to obtain the number online at irs.gov.

Generally, an employer must withhold and match Social Security (FICA) and Medicare taxes for a household employee, including health care workers, if the employer has paid the employee cash wages during the calendar year at least equal to $1,900 for 2014.  Employers are not required but can voluntarily withhold Federal income tax.

An employer must also pay Federal Unemployment Taxes (FUTA) if it has paid aggregate cash wages of $1,000 or more to household employees in a calendar quarter.  In New Hampshire, the same threshold applies for State Unemployment Taxes (SUTA).  Other states may have different thresholds.  See the U.S. Department of Labor's website at http://www.workforcesecurity.doleta.gov/unemploy/agencies.asp to see what your state's requirements are.
 
Prior to January 31 of the following year, you must provide a Form W-2 to your employee.

You pay the Nanny Tax (Federal income, FICA and Medicare withholdings and FUTA) when you file Schedule H with your Form 1040.  If you are not filing a Form 1040 return, mail a completed Schedule H and payment to the IRS by April 15.

If you have any questions, do not hesitate to contact the professionals at Dana S. Beane & Company, P.C



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