Tax season is in full swing, and January 31 is the deadline for employers to provide their employees with their W-2. Nannies, when paid legally, get a W-2 from their family. But the amount of information on that little piece of paper can be overwhelming and lead to a lot of questions – what is Copy B for? What about Copy 2? Why is there money taken out for “non-qualified plans?”
Our payroll partner, GTM Payroll & HR, has answers to help you understand everything on your W-2 and what it all means.
Watch the video below for a visual explanation of everything on your W-2. Or read and download the information from GTM’s website.
Why Do Nannies Get a W-2 Instead of a 1099?
One of the most common questions (and misunderstandings) surrounding household employment is whether a family can provide their nanny a 1099 at tax time and consider them an independent contractor rather than a household employee.
The short answer is “no.” A nanny works in the home and takes direction from the family, including the schedule of hours. A family can’t give their nanny a 1099 and they should be providing a W-2 for their in-home babysitter or nanny.
Form 1099 is used to report certain types of miscellaneous (Form 1099-MISC) or non-employee (Form 1099-NEC) compensation.
Non-employee compensation generally includes independent contractors, freelancers, sole proprietors, and self-employed individuals.
These forms generally report payments made “in the course of your business” and not your personal payments. Wages paid to a nanny are not considered business-related so Form-1099 does not apply to household employment.
Treating a nanny or babysitter as an independent contractor and not an employee is considered employee misclassification. The IRS deems this tax evasion as the employer is skipping their employer tax responsibility and leaving the entire obligation to the nanny to pay.
Hire Your Nanny From Our Agency
Whether you want a full-time nanny, help with after-school care, or occasional babysitting, we have professional, reliable, thoroughly screened caregivers. Request a service or give us a call (518) 348-0400 and we’ll provide a free consultation to get you the care you need!