Meridian Star

Features

January 9, 2010

Pay attention to the ‘nanny tax’

Do you remember the nanny tax scandals? In recent years, several high-profile political figures had their appointments derailed because it turned out they hadn’t paid their nanny taxes. You may not lose out on high political office, but you could be liable for interest and penalties if you overlook this tax.

What is the nanny tax? It’s simply employment taxes on the wages you pay to certain domestic workers, such as baby sitters or housekeepers. If you paid a domestic worker more than $1,700 in 2009, you may be required to report and pay social security and Medicare taxes on their wages. You could owe federal unemployment tax if you paid all your employees more than $1,000 in any calendar quarter.

To whom does the tax apply? It doesn’t matter what type of work is performed (gardening, baby sitting, nursing, or general household chores). What does matter is whether your worker is considered to be your employee or an independent contractor. Independent contractors are typically self-employed and, therefore, exempt from the nanny tax. Generally, if you control how and when workers do their jobs, they’re probably your employees. Independent contractors operate their own businesses. For example, a nanny who takes care of your kids in your home is probably an employee, but a day care provider who cares for many children is not.

Some employees are exempt. For example, you generally don’t have to pay nanny taxes on wages paid to your spouse, your child under age 21, or any employee under age 18. But there are exceptions, so you should check the rules carefully.

Avoid penalties and interest. If you fail to pay the tax, you could be liable for interest and penalties on the tax owed, and possibly even a penalty for underpaying estimated taxes. You might also have obligations to pay state employment taxes.



David Compton is a Certified Public Accountant with offices in Meridian and Birmingham, Ala.

1
Text Only
Features
  • Oil Oil Prices

    NEW YORK (AP) — Oil prices continued their two-week slide on Wednesday after a government report showed demand for crude products dropped even further from the weak levels of a year ago when the recession's grip on the economy was strongest.

    January 27, 2010 1 Photo

  • woods.jpg God's Encounter With Man

    Retired Pastor Thomas Wood wrote a book about a divine encounter with God. That was back in 1976, and at the time, Wood says he was unable to find a publisher.

    February 6, 2010 1 Photo

  • Religion News

        You can submit your religion briefs to blockridge@themeridianstar.com. The briefs are published every Saturday, and must be received every Monday by 5 p.m. in order to be published that Saturday. You may also fax briefs to (601) 485-1275.

    February 6, 2010

  • We apologize

      I had a conversation with a friend the other day. They recounted an experience they had where a driver cut them off, then gave them "hand signals."

    February 6, 2010

  • Being missions minded The earthquake in Haiti has turned a lot of people to those in need, but there are some who still feel like Americans should put forth more effort in aiding those in need.

    January 22, 2010

  • images_sizedimage_023002536 For Haiti

    January 22, 2010 1 Photo

  • Whose mission? The great theologian Paul Hewson once said "I had a mentor that once told me that I should stop praying for God to bless all the things I was involved in and find out what God was doing.

    January 22, 2010

  • Religion News

    January 22, 2010

  • (10:16 a.m.) Economy December wholesale prices edge up 0.2 percent

    January 20, 2010

  • Business Beat

    January 16, 2010

Biz Marquee
New Today
Poll

Do you think a historic marker should be placed where the Council of Federated Organizations (COFO) Building stood?

Yes
No
     View Results
Facebook
Facebook
Twitter Updates
Follow us on twitter
AP Video
Bon Jovi Helps Open Low-income Housing in Philly Pipeline Opponents Protest on National Mall Hagel Gets Preview of New High-tech Projects S.C. Man Apologizes for Naked Walk in Wal-Mart New Country Music Hall of Fame Inductees Named 'Piles' of Bodies in South Sudan Slaughter New Yorkers Celebrate Cherry Blossom Blooms SCOTUS Hears Tv-over-Internet Case Justice Dept. Broadening Criteria for Clemency Chief Mate: Crew Told to Escape After Passengers 'Miss Meadows' Takes Holmes Back to Her Roots Biden: Russia Must Stop Talking, Start Acting David Moyes Out As Manchester United Manager Raw: Leopard Bites Man in India Iowa College Finds Beauty in Bulldogs High Court to Hear Dispute of TV Over Internet Stowaway Teen Forces Review of Airport Security
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide