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 people should be allowed to carry firearms into government buildings?

Yes
No
     View Results
Facebook
Facebook
Twitter Updates
Follow us on twitter
AP Video
Raw: 2 Shells Hit Fuel Tank at Gaza Power Plant Raw: Massive Explosions From Airstrikes in Gaza Giant Ketchup Bottle Water Tower Up for Sale Easier Nuclear Construction Promises Fall Short Kerry: Humanitarian Cease-fire Efforts Continue Raw: Corruption Trial Begins for Former Va Gov. The Carbon Trap: US Exports Global Warming UN Security Council Calls for Gaza Cease-fire Traditional African Dishes Teach Healthy Eating 13 Struck by Lightning on Calif. Beach Baseball Hall of Famers Inducted Israel, Hamas Trade Fire Despite Truce in Gaza Italy's Nibali Set to Win First Tour De France Raw: Shipwrecked Concordia Completes Last Voyage Raw: Sea Turtle Hatchlings Emerge From Nest Raw: Massive Dust Storm Covers Phoenix 12-hour Cease-fire in Gaza Fighting Begins Raw: Bolivian Dancers Attempt to Break Record Raw: Israel, Palestine Supporters Rally in US Raw: Air Algerie Flight 5017 Wreckage
Hyperlocal Search
Premier Guide
Find a business

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