Some nanny payroll services and software help parents get an EIN. Parents must also withhold Social Security and Medicare taxes, then file these taxes with the appropriate government agencies. Parents that work as accountants, lawyers, or doctors risk losing their licenses to practice their profession if they don’t pay taxes for their household employees.Īll of the parent employers that have hired me over the past 27 years have said using a nanny payroll company or payroll software has really made their lives easier.ĭomestic employers need to get a federal Employer Identification Number (EIN) so they can legally pay their taxes. Employers that are not tax compliant are opening themselves to potential civil and criminal penalties and potential liability for taxes, penalty taxes, and additional charges. When parents don’t pay nannies legally it is considered tax evasion. The extra money when you retire, or in addition to paying your medical expenses, will be a benefit. Social Security and Medicaid: Full retirement benefits for Social Security and general medical coverage via Medicare are put into an account where you can collect once you meet a certain age requirement to retire. It is an insurance plan to help pay for necessary medical care. Workers Compensation: Workers Compensations covers employees who become sick or injured while working. This benefit is essential in a difficult economy and a pandemic!ĭisability Benefits: If you have a non-work related illness or need to take maternity leave, you can collect Disability Insurance while you are unable to work. Unemployment Benefits: Employees who lose their jobs, through no fault of their own, are able to receive a portion of their salary after a lay-off. History of Employment: Payment history helps to develop credit which is needed when applying for any type of loan including a credit card, car, mortgage, and rent. The benefits of being paid legally for nannies include: No one likes paying taxes but it really does protect nannies to be paid legally.
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