How to Pay Your Nanny Legally in MA

How to Pay Your Nanny Legally in MA

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Are you hiring a nanny in Massachusetts? If you’re considering working with a nanny, it’s important to know how to pay your nanny legally in MA to avoid any legal or financial issues down the line. Understanding nanny tax requirements and nanny industry standards is essential before signing a contract with your nanny.

Nanny Tax Requirements in MA

Here are some steps you can take to pay your nanny legally in MA:

  1. Determine if your nanny is an employee: If you hire a nanny to work in your home, they are considered a household employee, and you are their employer. This means you are responsible for withholding and paying certain taxes on their behalf, including the “nanny tax“.
  2. Obtain a Federal Employer Identification Number (EIN): You will need an EIN to report taxes to the IRS and state agencies.
  3. Register with MA state agencies: Register with the Massachusetts Department of Unemployment Assistance (DUA) and the Massachusetts Department of Revenue. You must also report your employee within 20 days of hiring.
  4. Calculate taxes: With each pay period you must withhold and pay federal and state income taxes, Social Security and Medicare taxes (FICA), and federal and state unemployment insurance taxes. The amount is determined per your nanny’s W4 and M-4 selections.
  5. Keep accurate records: Keep track of your nanny’s hours worked, wages paid, and taxes withheld.
  6. Quarterly requirements: Submit paperwork and payments to the IRS and Commonwealth of Massachusetts.
  7. Yearly requirements: At the end of each tax year, provide your nanny employee with their W2 form. Submit this information to the Social Security Administration, then submit state reconciliation documents and prepare a Schedule H to file with your family’s individual tax return(s).
  8. Consider using a payroll service: A payroll service can help you calculate and withhold taxes, file tax forms, and keep accurate records

Know how to pay your nanny legally in Massachusetts

There are a lot of important pieces to know how to pay your nanny legally in Massachusetts. To learn more about your federal obligations as a household employer, read the IRS’s Publication 926 – Household Employer’s Tax Guide. To thoroughly understand your Massachusetts obligations, read the Massachusetts Household Employer Guide.

It’s important to pay your nanny legally to avoid any legal or financial repercussions. While it may seem daunting, there are resources available to help you navigate the process. Consider using a payroll service or consulting with a tax professional to ensure you are complying with all applicable laws and regulations.