Nanny Tax Issues

[KHWEBERCPA]

I thought this was relatively simple, but as is usually the case, the problems are in the details.

Client hired a nanny. Thought they would hit the $1,900 threshold, so started withholding Social Security and Medicare. Earnings got up to $1,500, and the employee quit. My research leads me to believe that the client can reimburse the withheld social security and medicare, but they appear to still owe Federal Unemployment, and state unemployment..

My research also leads me to believe that a household employer only needs to issue W-2s if the social security wages are in excess of $1,900. That doesn't make sense to me. Shouldn't the employee receive a W-2 showing $1,500 of wages, and showing zero in the social security and medicare boxes? The employee obviously isn't an independent contractor, so a 1099 isn't appropriate. How does the $1,500 of wages get reported?

Has anyone encountered this before that can point me in the right direction on this? I appreciate any insight anyone can give.

Ken Weber

Vancouver, WA

[kcjenkins]

Only had it happen once, I went ahead and filed the W-2, with, as you stated, zeros in the tax withheld boxes. Never heard any problem from it,

[JohnH]

There is no W-2 filing requirement if you pay the household employee less than $1,900.

You are only required to refund them the withheld taxes and you both go on your merry way.

[kcjenkins]

Of course, the worker is still supposed to report the income, and, of course, they all do.......

[JohnH]

Yes, I would trust them completely to report the income.

[KHWEBERCPA]

Thank you for the insight. I appreciate it.

So there really are people out there who don't report all their income? :-)

Ken Weber

Vancouver, WA