BROWSE

Nanny Tax

Definition

The combination of payroll taxes withheld from a household employee and the employment taxes paid by their employer are commonly referred to as the nanny tax. Under current law, any family or individual that pays a household employee more than $2,000 a year must withhold and pay Social Security and Medicare taxes, also known as FICA. The law mandates that all domestic workers, such as cooks, nannies, housekeepers and gardeners, are subject to the nanny tax.

What is 'Nanny Tax'

A federal tax that must be paid by people who hire household help (a babysitter, maid, gardener, etc.) and pay them a total of more than a specified threshold amount during the tax year. The reason the IRS charges the nanny tax is because it considers an ongoing household helper to be the taxpayer's employee. As such, the taxpayer becomes an employer and must pay Social Security, Medicare and federal unemployment taxes on the wages paid to that employee. There may be state-level nanny taxes as well.

Explaining 'Nanny Tax'

The nanny tax does not apply if the babysitter is the taxpayer's parent, spouse, or if the babysitter is under 18 and is not primarily engaged in the household employment profession. Another way for taxpayers to avoid dealing with the nanny tax is by hiring household help through an agency. The agency will then be the employer and be the one who pays the nanny tax. Also, if household helpers are officially self-employed, they will be responsible for paying their own taxes and the taxpayer will not have to worry about the nanny tax.


Further Reading


The Economics of the Nanny State
books.google.com [PDF]
… Page 45. The Economics of the Nanny State 27 that a Pareto-relevant externality exists in this case … 1975." An Economic Appraisal of State Lotter- ies." National Tax Journal 41 (December): 395-404 … 1993. " Policy Watch: Alcohol and Cigarette Taxes." Journal of Economic …

How Equality Became Elitist: The Cultural Politics of Economics from the Court to the Nanny WarsHow Equality Became Elitist: The Cultural Politics of Economics from the Court to the Nanny Wars
heinonline.org [PDF]
… Page 45. The Economics of the Nanny State 27 that a Pareto-relevant externality exists in this case … 1975." An Economic Appraisal of State Lotter- ies." National Tax Journal 41 (December): 395-404 … 1993. " Policy Watch: Alcohol and Cigarette Taxes." Journal of Economic …

South African business nanny state: the case of the automotive industrial policy post-apartheid, 1995–2010South African business nanny state: the case of the automotive industrial policy post-apartheid, 1995–2010
www.tandfonline.com [PDF]
… Page 45. The Economics of the Nanny State 27 that a Pareto-relevant externality exists in this case … 1975." An Economic Appraisal of State Lotter- ies." National Tax Journal 41 (December): 395-404 … 1993. " Policy Watch: Alcohol and Cigarette Taxes." Journal of Economic …

Nanny or canny? Community perceptions of government intervention for preventive healthNanny or canny? Community perceptions of government intervention for preventive health
www.tandfonline.com [PDF]
… Page 45. The Economics of the Nanny State 27 that a Pareto-relevant externality exists in this case … 1975." An Economic Appraisal of State Lotter- ies." National Tax Journal 41 (December): 395-404 … 1993. " Policy Watch: Alcohol and Cigarette Taxes." Journal of Economic …

Theoretical and Legal and Economic Characteristics of Novellization of Taxation in UkraineTheoretical and Legal and Economic Characteristics of Novellization of Taxation in Ukraine
search.proquest.com [PDF]
… Page 45. The Economics of the Nanny State 27 that a Pareto-relevant externality exists in this case … 1975." An Economic Appraisal of State Lotter- ies." National Tax Journal 41 (December): 395-404 … 1993. " Policy Watch: Alcohol and Cigarette Taxes." Journal of Economic …

Taxation and Social EngineeringTaxation and Social Engineering
link.springer.com [PDF]
… Page 45. The Economics of the Nanny State 27 that a Pareto-relevant externality exists in this case … 1975." An Economic Appraisal of State Lotter- ies." National Tax Journal 41 (December): 395-404 … 1993. " Policy Watch: Alcohol and Cigarette Taxes." Journal of Economic …

Nanny Tax ImplicationsNanny Tax Implications
www.questia.com [PDF]
… Page 45. The Economics of the Nanny State 27 that a Pareto-relevant externality exists in this case … 1975." An Economic Appraisal of State Lotter- ies." National Tax Journal 41 (December): 395-404 … 1993. " Policy Watch: Alcohol and Cigarette Taxes." Journal of Economic …

It's Time to Prepare for the Nanny TaxIt's Time to Prepare for the Nanny Tax
www.questia.com [PDF]
… Page 45. The Economics of the Nanny State 27 that a Pareto-relevant externality exists in this case … 1975." An Economic Appraisal of State Lotter- ies." National Tax Journal 41 (December): 395-404 … 1993. " Policy Watch: Alcohol and Cigarette Taxes." Journal of Economic …



Q&A About Nanny Tax


Who does not have to pay the nanny tax?

The taxpayer will not have to pay the nanny tax if the babysitter is under 18 or if they are their parent, spouse, or domestic partner.

When was it first coined?

It was first coined by Iain Macleod in 1965.

How has it been used since then?

Since then, it has been used to criticize governments for over-regulating their citizens' lives or interfering with their decisions on how they live their lives.

How can taxpayers avoid dealing with the nanny tax?

Taxpayers can avoid dealing with the nanny tax by hiring household help through an agency.

Are there state-level taxes for household helpers?

Yes, there may be state-level taxes for household helpers.

Who popularized the term?

Bernard Levin, Auberon Waugh and Margaret Thatcher were all influential in popularizing the term.

What is a nanny tax?

A nanny tax is a federal tax that must be paid by people who hire household help and pay them more than a specified threshold amount during the year.

What is the term "nanny state" used to describe?

The term nanny state is used to describe a government that interferes unduly with personal choice.