The Fucking Nanny Tax Rabbit Hole - Burton Family Jewels

Next week I will begin a doctoral program in Social Anthropology in pursuit of my dream to live a life of the mind, as it were. ?We have hired a nanny to care for Lil Zo while The Good Doctor and I do our respective thangs. Yet, what should have been a bittersweet transition out of domestic serfdom has become a Borgesian labyrinth of?bureaucracy.??

I spent the better part of yesterday fighting my way out of the rabbit hole that is Nanny Taxes, a term that a few weeks ago would have confounded me. I now know that by hiring a domestic worker The Good Doctor and I have for all intents and purposes become a business, and are therefor subject to pay Social Security, Medicare, and State Unemployment Taxes on all wages.?

Of course we could have opted to jip our rich, alcoholic, and abusive Uncle Sam out of his share of our paltry operation be we decided to go above board for a few reasons:

1. We ain't trying to get Wesley Sniped, Martha Stewarted or, God forbid, Daryl Strawberried.?
2. No one is coming out the woodwork during my wife's inevitable presidential bid talking bout tax evasion.?
3. Our nanny wants to someday start her own daycare and needs a valid employment record.

For these reasons we have decided to suck it up and perform our civic duty. When I close my eyes at night I will be comforted by the knowledge that I have helped finance the construction of?missiles schools. And by being above board we can also receive tax benefits such as the Childcare Tax Credit or use of a tax-deferred Flexible Spending Account. We can only receive one of these benefits so we chose to max out an FSA at $6,000 because we'll save more in the end. ?

So yesterday, on my morning off from watching The Tyrant, during precious time that I could have spent watching Breaking Bad or galavanting around the neighborhood, I instead dutifully sat at my laptop and initiated a process that, 24 hours later would still have me sufficiently fucking pissed. .

Note: This is turning into an epic post and if you choose not to read beyond this point I understand. In fact, if you have made it to this point, or any other point on this blog I thank you.?I write what follows in the sincere hope that it is of some help to others trying to figure out how to pay Nanny Taxes (or maybe whether or not they want to pay them at all). If I knew then what I know now. . .?

If you're still here let me first add that I genuinely believe that the Federal Government doesn't really want people to pay Nanny Taxes. If they did they would make it as easy as possible. If someone were trying to hit me off with regular payments you best believe I would facilitate the hell outta dem shits, not make them jump through moving rings of fire, but I digress.?

1. Prove Legal Status: I downloaded an I-9 Form from the IRS website and will have the nanny fill it out on her first day to prove that she is legally eligible to work in the US. Okay, no big deal.
2. Have Nanny Fill Out IRS Form W-2 & W-3:?This should have been mentioned in the beginning of both tutorial documents. However, it was?buried?somewhere toward the bottom. One would think that you could just go online and simply download a W-2, especially since they provide you with a link.?Apparently, you cannot. In order to receive official W-2s you have to order them from the IRS and wait 7-10 business days for them to be snail mailed to you. You can also sign-up to have your employee fill them out online, but the process is exceedingly complicated.?
3. Figure Out How The Nanny Will Pay State & Federal Taxes: We're leaving that to her.
4. State Employment Tax: Here I had to go to my state's employment website (which sucks) and determine whether or not I have to pay this "FUTA" tax, which I do. But first I had to:

• Register for a Username and Password on the website
• Register as a business in the state.?
• Enter my Federal Employer ID number which at this point I did not have because I did not get to that step yet.?
• Wait for 7-10 business days to receive a packet in the mail telling me the tax rate that I must pay, when I can pay it, and how I can pay it.?

Apply for an Employer ID Number (EIN), then return to step 4.?

Figure Out Who Will Pay What Portion of Medicare and Social Security Tax: We decided to take on her share of Social Security and Medicare Tax as well as our own. This amounts to 13.3 percent of her pay. The figure is incorrectly represented as 15.3 in the first, "easy" guide.

Create A Payment Invoice: Microsoft Excel 101

Calculate The Nanny's Taxes: There are free Nanny Tax Calculators?but I couldn't get it to work to the point where I felt confident that it was actually correct. I calculated manually by moving the percentage decimal over two spaces and multiplying. If you don't know what I'm talking about quit reading and give up now. Unless your nanny gets paid a flat rate or always works the same hours you'll have to do this every pay period. After a few weeks I'm sure I'll be confident enough to use the calculator.?

Figure Out HOW You're Going To Pay The Damn Taxes.?

• Ask your employer to withhold more federal income tax from your wages in 2012.
• Ask the payer of your pension or annuity to withhold more federal income tax from your benefits.
• Make estimated tax payments for tax year to the IRS: I chose this option because I thought it would be the most straight forward. How silly of me? I still have to fill out IRS Form 1040 ES?in order to accomplish this.?

Keep All Your Records

I would not at all be surprised if all the republicans who accuse Big Government of inefficiency came to that conclusion while trying to pay the nanny tax. I mean, hire a consultant from Paypal and make this shit simple.

At this point I'm somewhere in the ballpark of 85% done with this madness. For the record, there are a number of services that claim to do a lot of this stuff for you. I don't have any experience with them so I can't speak on it as they are too expensive for us.?

I guess most people that can afford a Nanny can afford to pay extra to make the process easier. Alas, we are not yet in that boat.??

Source: http://www.burtonfamilyjewels.com/2012/08/the-fucking-nanny-tax-rabbit-hole.html

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