Year end Nanny Taxes more than anticipated

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ThankYouJack
Posts: 2842
Joined: Wed Oct 08, 2014 7:27 pm

Year end Nanny Taxes more than anticipated

Post by ThankYouJack » Fri Jan 11, 2019 10:03 am

I have a part-time nanny/babysitter that I paid $5,824 in wages for 2018 and I used Intuit Payroll for withholding and SS. Federal income tax withheld was $214, Social Security was $361 and medicare tax withheld was $84. I was thinking I would break about even for the year but was unpleasantly surprised when I put the numbers into TaxAct it says I owe an additional ~$1,100. Does this seem right or I wonder if I made a mistake someplace. I probably just need to dive into the numbers and Schedule H closer but figured I'd post here first to see if anyone else has run into something similar.

DIFAR31
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Re: Year end Nanny Taxes more than anticipated

Post by DIFAR31 » Fri Jan 11, 2019 10:15 am

It sounds like you withheld the employee's contribution to SS and Medicare correctly. Have you also made the employer's portion of these payments?

Righty
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Location: CT

Re: Year end Nanny Taxes more than anticipated

Post by Righty » Fri Jan 11, 2019 12:32 pm

I think DIFAR is on to it - employee withholding is < half of total tax due

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HueyLD
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Re: Year end Nanny Taxes more than anticipated

Post by HueyLD » Fri Jan 11, 2019 12:35 pm

214+361+361+84+84=1104.

Righty
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Re: Year end Nanny Taxes more than anticipated

Post by Righty » Fri Jan 11, 2019 12:37 pm

Does your state have income tax?

Topic Author
ThankYouJack
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Re: Year end Nanny Taxes more than anticipated

Post by ThankYouJack » Fri Jan 11, 2019 3:00 pm

DIFAR31 wrote:
Fri Jan 11, 2019 10:15 am
It sounds like you withheld the employee's contribution to SS and Medicare correctly. Have you also made the employer's portion of these payments?
I made payments each month via EFTPS which I thought were the employers portion. I also filed a 941 for each quarter. But I'm confused as it doesn't seem that TaxAct is factoring that in.
HueyLD wrote:
Fri Jan 11, 2019 12:35 pm
214+361+361+84+84=1104.
Interesting. This may be something I need to reach out to TaxAct for or get a CPA to help as it doesn't seem to factor in the amounts that I already paid


Righty wrote:
Fri Jan 11, 2019 12:37 pm
Does your state have income tax?
Yes, but this is just the federal portion that I owe

go140point6
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Re: Year end Nanny Taxes more than anticipated

Post by go140point6 » Fri Jan 11, 2019 3:56 pm

Did you answer "Yes" when asked by TA if you had a household employee? I also use Intuit through Savvy Nanny Payroll Services and they always send out a reminder to answer "No" to that question unless you are answering a question about the Child and Dependent Care Credit because the tax software assumes you want/need to file Schedule H. Here's exactly what they say from the email, maybe this applies to you:

If you use an accountant...
Provide information to your accountant at tax time regarding what you have paid your employee plus information about what you have already paid in payroll taxes for both state and federal.  You can find all the information you need when you log into our system and select the "Reports" tab.

However, make it absolutely clear that this information is to be used in the Child and Dependent Care Credit portion of your tax return and NOT to file a Schedule H.  Most accountants, when they see taxes have been paid already via form 941, as you have been doing, will understand not to file Schedule H.  But because Schedule H is the more commonly used method, it is possible your accountant may become confused and try to file Schedule H on your income tax return.  Do not let this happen.  Please review your tax return before it is filed by your accountant to ensure Schedule H is not included.  If you do file Schedule H you not only will be paying taxes twice on your employee but you will create a bureaucratic quagmire between yourself, the IRS, and the Social Security Administration later in the year that I will be unable to help you with.  If you have paid a household employee outside of our service consult your accountant for advice.

If you use TurboTax, another tax software, or file your own taxes...
Read above.  And pay careful attention when asked if you have employed a household employee.  Unless you are responding to a question regarding the Child and Dependent Care Credit, you should not answer affirmatively. TurboTax and other tax software often presume you will file schedule H, rather than pay your payroll taxes using form 941 so the questions will be worded in such a way that they are making an assumption you must want to file schedule H if you have a household employee.  So be careful here.

Topic Author
ThankYouJack
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Re: Year end Nanny Taxes more than anticipated

Post by ThankYouJack » Fri Jan 11, 2019 4:22 pm

^ I did answer yes that I had a household employee. That's interesting. Thanks for the feedback!

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