Investments glossary

Nanny Tax

A nanny tax is a federal tax paid by people who employ household employees and pay wages over a certain amount. In 2020, for cash wages of $2200 or more per employee, social security and Medicare taxes must be withheld at a rate of 15.3%, with the employer and employee each paying half (7.65%). If paying cash wages of $1000 or more per quarter per employee, the employer pays a 6% unemployment tax on annual cash wages up to $7000.1

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