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Nanny Q & A's

Q:  What is a Nanny?

A:   The term Nanny describes an individual hired by a private family to care for the family’s children either on a live-out or live-in basis. In most cases, the Nanny cares for the children in the comfort of the family’s home.

Q:  What are the responsibilities of a Nanny?

A:  The most important role of a Nanny is to create a nurturing, safe and stimulating environment in which a child can flourish.

Q:  What are the typical working hours?

A:  A nanny typically works a five-day workweek, 10-12 hours per day, depending on the need of the family. The two days off are mostly weekends, however that can be flexible. Additional hours can be compensated with time off or additional pay.

Q:  What is the typical Nanny’s salary?

A:  The nannies salaries typically ranges from $300-$1000+ weekly depending on the nanny’s background, qualifications and responsibilities. Salaries and benefits are usually negotiated and agreed upon before employment begins.

Q:  What are the benefits that are typically offered?

A:   Nannies often times receive paid vacations which is usually 1-2 weeks off which is usually agreed upon by both parties. A handful of families provide health or dental insurance after the nanny has passed the probationary period agreed upon by both the family and the Nanny.

Q:  What taxes does the family pay? What taxes does the Nanny pay?

A:  The nanny is a domestic employee; therefore she is responsible for paying her federal and state taxes, social security and Medicare taxes. A few nannies’ elect to have their taxes withheld each pay period. In most cases, the family pays state unemployment taxes, and contributes FICA.

Q:  What do I do - I didn't get a W-2? 

Courtesy HomeWork Solutions Inc., Simplifying the Nanny Taxes since 1993.  Member, International Nanny Association

A:  Every spring we receive inquiries from nannies who did not receive a Form W-2 from their employer. This is almost always when the nanny is no longer employed by the family. The following are some tips and steps to take.

• Form W-2 is due January 31. The IRS specifically asks that you allow the employer until February 15 before you report it missing. The January 31 date is the 'mail by' date.
• It is February 15 and you still do not have a W-2. First step is to phone the employer. Often the nanny has moved and the employer does not have a valid mailing address. Allow two additional weeks if you needed to update your address for the employer to obtain/generate a replacement.
• The employer does not intend to give you a W-2 or intends to provide a 1099. The next step is to remind the employer that as a nanny you are entitled to a Form W-2. The employer is responsible to remit the Social Security and Medicare taxes, as well as pay unemployment insurance. The employer is NOT responsible for the nanny's income taxes unless it was agreed to in the written work agreement (rather rare). The IRS Publication 926 is a point of reference to reinforce this.
• Phone Support from the IRS. The IRS encourages employees in this situation to phone 1-800-829-1040 for guidance. In our experience, you will be told the same information as what is contained here, and wait on hold a VERY long time to get this information!
• The employer still refuses to provide the W-2 Form. The nanny is still responsible for reporting her nanny wages and filing an income tax return. This is accomplished by completing Form 4852 Substitute Form W-2.
  
  Tip!   Be very sure that 7(A)(a) is the sum of the gross wages plus the values for Social Security and Medicare Taxes due from the employer.  For example: Nanny is paid $2000 per month for 8 months.  7(A)(a) is $17224.00 ($16000 + $1224) The Social Security and Medicare is 7.65% of the gross wages. 7(A)(b) is $16000.

Nannies who use the Form 4852 will need to provide the family's name (both John and Mary Smith), their address and phone number (phone is not requested but very helpful). If the nanny has received a Form W-2 from this family in the past, the nanny should report the EIN from the prior form. If not, enter Unavailable or Unknown.

The answer to line 8 of Form 4852 is that 7(A)(a) is the sum of cash wages and employee Social Security and Medicare paid by employer. 7(A)(b) is cash wages alone.

The answer to line 9 is a brief statement - something to the effect "I worked as a nanny from x date to y date. I was paid at RATE. I phoned the family and requested the Form W-2 and they refused to provide." or a similar BRIEF narrative. It is important that you state you were a nanny.

The nanny cannot eFile when using a substitute Form W-2. The conventional paper tax return is mailed to the appropriate address.

More Information
Frequently Asked Questions About the Nanny Tax.
IRS Advice for Missing Form W2

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