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Legal Dictionary
  • Nanny Tax
Nanny Tax
Nanny tax is a federal tax imposed on people who hire domestic workers and pay them more than $ 1000 in total wages during the tax year. The IRS charges a nanny tax because it considers an ongoing household helper to be a taxpayer's employee. As a result, the taxpayer becomes an employer and must pay social security, medicare, and federal unemployment taxes on the wages paid to that employee.