You should get the completed Form W-4 from your household employee on or before your household employee’s first day of work. #Does nannypay calculate futa taxes software#NannyPay software will automatically determine the correct amount of withholding based upon the number of exemptions and marital status your household employee claims. Your household employee must complete a Form W-4 to permit you to withhold income tax. If you and your household employee agree to withhold federal income tax, your household employee is required to provide you with a completed federal W-4 form. Some local taxing authorities are supported as well! Tax Forms needed for Household Employees If you have enabled the appropriate settings, the NannyPay software will automatically calculate the amount of federal and state income taxes you must withhold from your household employee’s pay. To help your household employee avoid a hefty tax bill at the end of the year, we recommend that you withhold both federal and state income taxes. Of course, your household employee will still be responsible for paying federal and any state income taxes on the cash wages he or she receives from you. You will also learn that most states follow this rule as well. If both you and your household employee agree, you may also withhold federal income tax from your household employee’s wages otherwise, you have no obligation to withhold federal income tax. You are not obligated to withhold federal income tax from your household employee’s wages unless you and your household employee both agree to do so. Should Household Employers Withhold Federal Income Tax? It will also withhold income tax (if that option is enabled) based upon the “grossed up” wages. If the appropriate option is checked, NannyPay will not withhold your household employee’s share of FICA, and will “gross up” your household employee’s income appropriately. (NannyPay also assumes that this amount is income for state income tax purposes as well.) Those amounts do not, however, count as Social Security and Medicare wages (FICA Wages) or as federal unemployment tax wages (FUTA Wages). Therefore, these taxes must be included in your employee’s wages as additional income. If you choose this option, remember that the government considers the Social Security and Medicare taxes you pay on behalf of your employee to be additional income to your employee. The government also offers household employers the option of paying their employee’s share of Social Security and Medicare taxes, in addition to their own. You will pay your half of the tax when you file your federal tax return next year. NannyPay will automatically calculate the correct amount of FICA withholding. One half of the total FICA tax you owe the government is withheld from your household employee’s wages. If you will pay your household employee $2,400* or more this year in gross wages, you are required by federal law to withhold and pay Social Security and Medicare taxes, which are sometimes collectively referred to as FICA taxes. If your household employee will earn $2,400* or more per year, you must withhold Medicare and Social Security taxes, commonly referred to as FICA.
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