Nanny Tax Changes for 2019

In 2019, paying employment taxes becomes required by law once a babysitter, nanny, or other household employee earns $2,100 in a calendar year. Along with other nanny tax changes for 2020, this amount increases to $2,200.

On the other end, the cap for Social Security tax is now at $132,900 for 2019.  In 2018, this was $128,700.  Wages above these amounts are not subject to Social Security tax, but are subject to Medicaid tax.

Also, federal income tax brackets and deductions amounts have changed. The 7 possible rates remain the same, but the amount of income to reach each higher rate has increased, resulting in less income taxes to be withheld for those on the cusp of a bracket.

These changes go into effect started in wages paid in 2019.  For 2018’s tax return, the 2018 brackets will continue to be used.  And if you have a nanny or other household employee, you would still create and file a W-2 for each employee by January 31, 2019.

There have also been some notable changes for individual states

  • Washington state has enacted Paid Family and Medical Leave, requiring up to .4% contribution to fund (less for employers with < 50 employees)
  • Missouri has eliminated one of its income tax brackets
  • North Carolina and Georgia have lowered individual income tax rates

What hasn’t changed:

  • The rates of Medicare and Social Security taxes remain unchanged from 2018.
  • It is still tax evasion to avoid responsibilities if you do meet the requirements to be considered a household employer.

Download our handy app from the Google Play store for Android devices or the App Store for iOS devices to automatically calculate taxes and withholdings, track time, create & email pay statements and guide you through your tax responsibilities.

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