The Social Security Administration recently released its employment coverage thresholds for 2018.
Social Security and Medicare taxes (commonly referred to as “nanny taxes”) must be paid by the family and the employee for any household workers, such as nannies or housekeepers, who earn $2,100 or more in cash wages in 2018. This is a $100 increase to the threshold which was last changed in 2016 to $2,000.
Wages paid to a spouse, child under age 21, parent, or any employee under the age of 18 do not fall under the nanny tax threshold.
Employers must pay 7.65% (Social Security at 6.2% and Medicare at 1.45%) in nanny taxes. The same amount can be withheld from the employee’s pay, or the employer can pay their worker’s share and not withhold. The total Social Security and Medicare taxes must be 15.3% of cash wages.
For more information on the nanny tax threshold, visit Employment Coverage Thresholds on the Social Security Administration website.