When Do You Have to Pay Taxes on Your Babysitter?

This past year my quality of life significantly improved.

Full-time housekeeper? Lottery? Kids doing their own laundry?

None of the above.

Drum roll please…my first born is old enough AND responsible enough to babysit her sisters.

You read that right, I can just walk out of my house anytime, completely kid free. I can go to the grocery store alone. I can get a mani-pedi alone whenever the mood strikes me. I can go to the gym without bribing my kids to be quiet (I used to pay the girls “gym bucks,” a $1 for staying quiet and not playing on the equipment while I worked out).

Don’t worry. We do pay her (though she often asks for payment in new release books and DVDs). And we don’t leave her alone with her sisters for more than a couple of hours at a time or at night or when she has homework to do (or is just not in the mood to entertain her sisters).

Babysitters are a big topic among parents with young children. Search any parenting board and you will find lots of questions about how to find a good babysitter, how much to pay a babysitter, and should you expect the babysitter to clean up after the kids (heck yes).

The one question I don’t ever see is do you have to pay the “nanny tax” on your babysitter?

Not to ruin your next date night, but the answer is yes, you do have to pay nanny taxes to comply with federal law.

What is the “nanny tax?” The nanny tax is a combination of federal and state tax requirements that families must manage when they hire a “household employee.” This includes:

  • Social Security & Medicare taxes (FICA), as well as federal & state income taxes withheld from the employee; and
  • Social Security & Medicare taxes, as well as federal & state unemployment insurance taxes paid by the employer.

Your babysitter is considered your “household employee” because you control what your babysitter works on (your kids) and how she should take care of them (your house rules).

That babysitter who watched your kids one time and let them make slime? You don’t need to worry about her, but you do need to worry about your regular sitter.

For tax year 2018, nanny taxes come into play when a family pays a babysitter – or any household employee – $2,100 or more in a calendar year (or $1,000 or more in a calendar quarter for unemployment insurance taxes).

You can see how easily this could add up.

Are there any exceptions? Yes, you do not have to pay nanny taxes in the following scenarios:

  • your babysitter is employed by an agency, who controls her work and how it is done;
  • your babysitter watches your children in her own home (like a home daycare); or
  • your babysitter is a full-time student AND under the age of 18.

Since we are talking about the IRS and taxes, you should consult with an accountant and/or a tax attorney about your particular situation.

Okay readers. What’s the going rate for babysitters in your town? Do you pay teenagers less than you pay adults? Leave a comment or send an e-mail.

Copyright © 2018 by Siobhán Fitzpatrick Kratovil. All Rights Reserved.

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