Received Tuesday, October 7, 2008. - Perspective & Opinion
I am in the process of looking for a new job and am going through an agency. I particularly like the idea of using an agency because it seems that the tax process will be much easier, since taxes would be taken directly out of my paycheck, and then I would be paid directly by the agency. A friend of mine who is also a nanny found her family through the same agency. She however is paid directly by her family and not the agency. So either her Social Security or Medicare (I'm not sure which) is taken out of her weekly payment by the family. She told me that at the end of the year her employers fill out some sort of tax form, so she won't get any money back but doesn't have a cut taken out of her weekly pay.
I was very confused by this, is this legal, can you do that with taxes? I want to make sure that I'm taking care of my taxes and that I'm a legal employee. I'm just not quite sure where to start. Also, if I decide not to go through an agency and find a family on my own who doesn't pay my taxes up front how do I go about that? Are there any simple sites that may be able to help me out? I'm not sure if this matters either, but I live in Minneapolis, MN.
Nanny Chex! I placed in my position by an agency and they recommended Nanny Chex. The parents pay Nanny Chex and then they take out social security, taxes, medicare, etc and send you a check for the rest. I have mine set up for direct deposit and it's wonderful! Obviously the parents have to pay a service fee of some kind, but I'm not sure how that side works. their website in www.nannychex.com
ReplyDeleteWow, what agency takes out takes for you? Usually, they consider you an independent contractor. Because they don't want to be bothered.
ReplyDeleteopps taxes
ReplyDeleteNot sure I fully understand exactly what information you want, but this is my understanding. You can use 4nannytaxes.com for free, just register with an email, and they have a payroll calculator that will give you hard numbers.
ReplyDeleteFor example, if your gross salary was $700 a week, in NYC, your employer would pay $760 a week because they are required to pay a matching Social Security and Medicare, plus carry unemployment and disability. Your take home pay would be about $536 because your employer would deduct: your portion of SS ($43), your portion of Medicare ($10), federal taxes ($80), and NY state taxes ($30). I believe you and your employer can choose NOT to have your portion of SS and medicare deducted weekly, BUT you are still fully responsible for them at year's end so would expect a big tax bill. However, federal and state taxes MUST be deducted weekly. When I entered the numbers for MN, they look pretty similar.
If you are employed by an agency and they issue your paycheck, I believe you would still have to pay a similar amount of taxes, but your employer would not pay SS or Medicare (their extra $60). Instead, the agency would pay that since they would be your employer. However, many nannies are placed by agencies and still employed by the family. In which case, the same numbers as above apply.
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ReplyDeleteAnonymous said...
ReplyDeleteIf a nanny is being paid on a 1099, it is probably illegal. If you report to the same place everyday for work, you cannot be an independent contractor. You are being cheated.
If you work for a different family everyday, and report to a different house everyday, then you are an independent contractor.
12:00 AM
RE-POST FOR ANONYMOUS!
I was just going to say... To file as an independant contracter is illegal. You are a household employee. I agree.. Use nannytaxess its free indeed.
ReplyDeleteI also used Nanny Chex and was very happy with the results. I tried a few online calculators and found that they were too simplistic and didn't cover some important local taxes and their federal amounts were also not correct. I would recommend calling Nanny Chex - they were really helpful and didn't charge anything to get me started.
ReplyDelete