Do I really need to pay nanny taxes?
If your research on nanny taxes has done little more than fill you with dread and confusion, you're not alone. Childcare is insanely expensive and having to pay an additional tax on this cost feels like adding insult to injury. However, when you hire a nanny and plan to pay him or her more than $2,200 in a given calendar year, you officially become an employer - with all the related responsibilities. We have a page that details what those duties are. While complying is burdensome and expensive, you can claim tax benefits for your childcare costs, it provides nannies with important benefits, and it's just the right thing to do. On a more serious note, the IRS has stepped up enforcement of employer tax evasion and can charge back taxes and steep penalties. Don't add that to your list of worries!
Why would my nanny agree to being paid over the table?
It's a valid question. Being paid under the table is such a common practice that choosing to pay taxes might feel unnecessary or like a waste of money. Legal reasons aside, there are 3 key benefits for nannies that come with being paid legally. 1) A legitimate employment and income history - important when applying for car loans, leases, mortgages, etc. 2) Unemployment benefits - if your nanny loses her job and can't prove she actually earned money, she won't qualify for government assistance. 3) Social security - retirement benefits are paid out in part based on how much employees paid into the program in the form of taxes. Many years of no tax contributions could mean a low social security payout someday. We put together a helpful guide for having this conversation with your nanny - find it here.
How do you keep your prices low?
Our CEO is a CPA and developed a partnership with a trusted payroll software company to offer a low cost option for families that don't need a full suite of business services, but still require accurate, professional tax reports. You get access to our savings and unique expertise without having to pay for features you don't need.
How do your prices compare to other services?
Most of the popular nanny payroll services charge setup fees, W-2 filing fees, and high monthly or quarterly subscription fees, which adds up to over $1,000/year. Our guided DIY service gives you the expert help and peace of mind you need for a fraction of the cost.
If you choose to add on some extra help through our optional coaching sessions, talk directly with someone on our US-based support team (a fellow working parent!) for less than the setup fee at most other nanny tax companies.
Can I really handle the taxes by myself?
We believe the most complicated aspects of nanny taxes are:
Calculating withholdings and taxes due
Knowing where and how to get started
Remembering what needs to be done and when to do it
Our goal is to eliminate these concerns by providing automatic, accurate calculations; simple visual guides; and consistent reminders with action steps. If you follow our steps, actually filing the taxes takes a matter of minutes - and we have full confidence you can handle that.
Can I cancel my account?
Absolutely. Cancel your monthly account at any time and retain access to your previous paystubs and reports. You will no longer be able to enter nanny hours and run reports for future pay periods. Please note that since we offer a significant discount for our annual plan with upfront purchase, there are no refunds for annual membership fees. To cancel, go to the Member Dashboard, log into your account, and select "My Subscriptions." From there, you can view your current plan or cancel when needed.
How does Nanny Files work?
Once you've signed up for your membership, we'll invite you via email to our secure payroll platform, which is powered by a highly rated, secure business payroll software. This means your tax calculations and reports are always accurate and consistently updated for changes to the tax code, but as a household without complicated business needs, you get only what you need at a highly discounted rate.
You'll also get access to our setup guides, which will walk you through every step of obtaining tax IDs and getting the right information into your payroll account. Our guides were created by our CEO - a CPA and mom of 3 - so every step was documented specifically for household employers.
It can take up to a couple of weeks to receive your tax IDs from your state's agencies, but once all the information is in hand you'll be ready to run your first payroll.
What if I need lots of help? Do you offer free support?
To keep your costs low, we don't make any of our members pay for support services they're not using. We do have e-mail support for anything specifically related to our payroll software.
If you would like some extra help during the setup process or when it comes time to file quarterly or annual taxes, sign up for one of our affordable coaching sessions to get personalized help.
How do you deal with nanny shares?
We love nanny shares and think they are a fantastic way to spread childcare costs across multiple families while providing social connection for our kids. Each family in the nanny share does need to sign up for their own membership, as each family is a standalone employer for tax purposes. Hours will be split according to your share agreement and your nanny will receive paystubs and W-2s from each family. This enables each family to qualify for well-deserved tax credits and provide documented proof that they are operating above board.
Do all families in our nanny share have to use Nanny Files?
No, each family can use its preferred payroll solution. For more information on nanny share logistics and active multi-family promotions, refer to our nanny share page or send an email to firstname.lastname@example.org.
Which states do you support for tax reports?
We support all 50 states!
Didn't find the answer to your question? Send us a note and we'll get back to you within 24 hours.