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nanny tax

A nanny tax—also known as a household-employment tax—is not a legal term, but refers to a federal social security tax imposed on the employer of a domestic employee (such as a nanny) if the employer pays the employee more than a specified amount in total wages in a year.

In Pennsylvania, as in other states, the 'nanny tax' refers to federal tax obligations that apply to household employers. If a household employer in Pennsylvania pays a domestic employee, such as a nanny, more than the federal threshold amount ($2,400 for tax year 2022), they are responsible for withholding and paying Social Security and Medicare taxes. These are collectively known as FICA taxes. The employer may also be responsible for paying federal unemployment tax (FUTA) if they pay wages of $1,000 or more in a calendar quarter. Additionally, Pennsylvania employers must comply with state employment tax requirements, which include withholding state income tax and paying state unemployment insurance taxes through the Pennsylvania Department of Labor & Industry. It's important for employers to keep accurate records of all payments and taxes as they may be required to provide their employee with a W-2 form and file corresponding forms with the IRS and the state tax agency.

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Taxes

nanny tax

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Pennsylvania State Code

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Taxes

nanny tax

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