Perhaps the most time consuming, troublesome issue for a household employer is the nerve-racking uncertainty involved with managing payroll and taxes. The following guide will provide a timeline and checklist to help streamline the process.

When Your Nanny is Hired:

1. You must obtain an employer identification number (if not obtained already).
2. Have your nanny complete Form W-4 if she is planning to withhold income taxes.
3. Obtain and submit Form I-9 for your nanny’s U.S. citizenship and eligibility verification.
4. Now is the time to apply for a state unemployment ID number.
5. Obtain the proper paperwork to apply for a state withholding number (if applicable in your state).
6. You must now apply for your state’s new hire report (if necessary in your state).
7. Obtain Form 1040-ES for estimated tax payments (if you choose to utilize this option).
8. Be sure to check into workers’ compensation policies within your state.
9. Inform your nanny about your established pay period schedule.

When You Pay Your Nanny

1. Withhold Social Security and Medicare taxes.
2. Pay federal, state and local taxes that may apply (and pay them on time).
3. Withhold federal and state income taxes as agreed.
4. Make advance payments of the earned income credit, if applicable (Form W-5).
5. Send copy A of Form W-2 along with Form W-3 to your Social Security Administration offices by February 28 of each year (or March 31 if you choose to file electronically).
6. Each year on April 15, file Schedule H with your federal income tax return (Form 1040).
7. Keep all nanny personnel records in a safe place for up to five years.