Paying Your Nanny Legally

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Generally speaking, most nannies are employees and not independent contractors. For parents who wish to employ the services of a nanny, this means that they must first become a legal employer. While it can be tempting (and may seem easier) to pay your nanny off the books, in the long run doing so can set you up for trouble. In addition to incurring fines and having to pay back taxes, you could be subject to civil and criminal penalties under the law.

If you’re considering hiring a nanny, here’s the steps you’ll need to take to pay your nanny legally.

File for a state employer identification number, verify that your employee is legal to work in the U.S., report your new hire to your state government, set up a payroll system, pay your employee according to current, Federal and State labor laws, file proper end of the year forms, file a W-3 from with the Social Security Administration.

If you would like to work with a professional payroll service that specializes in domestic taxes, please visit the International Nanny Association’s website: http://www.nanny.org.  You will find a list of trusted companies that offer domestic payroll services.

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