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Nanny Taxes on Your Own
When you pay an employee working in your home $1,600 (2008) or more a year, the government considers you an employer responsible for paying employment taxes. These taxes, commonly known as "nanny taxes," include Social Security, Medicare, state and federal unemployment tax and federal and state income tax. The IRS estimates that completing the federal portion of the taxes will take about 8 hours. Most clients of Parents in a Pinch have opted either to use their own tax preparer or to hire the highly recommended Breedlove nanny tax service to handle this. If you prefer to handle the taxes yourself, here are some resources for you:
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For information on being a household employer, consult IRS publications 926. This publication explains the federal laws and tax forms. You can also get answers to tax questions from the IRS by calling 800-829-1040.
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Contact the Massachusetts Department of Revenue for information about the state income tax laws and forms to complete and information on unemployment. Click here to find the Massachusetts Household Employer Tax Guide. You can also reach the Department of Revenue at 800-392-6089.
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Massachusetts also requires families to provide Worker's Compensation Insurance for their nannies. You can often purchase this through the insurance agent you use for other types of insurance. If your agent does not offer this type of insurance, you can contact Chris Gurrisi at Cohen-Miles Insurance Agency at 617-489-1213. This agency, located in Belmont, will sell you a stand-alone worker’s compensation policy. The approximate cost is $255/year.
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