How to Use a Nanny Tax Calculator in 5 Easy Steps

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A nanny tax calculator* is a valuable tool for families hiring an in-home sitter or nanny.

Here are five ways it can help you and their nannies.

  1. Estimate Your Tax Obligation

This is your share of Social Security and Medicare taxes (commonly referred to as FICA taxes) as well as federal and state unemployment insurance taxes.

  1. Calculate Your Employee’s Withholdings

This will help your nanny figure out their tax obligation and take-home pay.

  1. Determine Your Estimated Tax Savings from a Flexible Spending Account (FSA)

The nanny tax calculator will estimate how much you’ll save at tax time by contributing to your employer-sponsored FSA plan.

  1. Convert Gross Pay to Net Pay

While you’ll want to negotiate your nanny’s pay based on gross wages, your nanny may want to know how that translates to what they bring home each pay period.

  1. Translate a Salary to Hourly and Overtime Rates

Nannies, by law, are required to be paid hourly and not a salary. However, if you have a salary in mind, you can use the nanny tax calculator to break that amount into an hourly rate and overtime rate. With some exceptions, mostly around live-in employees and companionship care, an overtime rate of at least time-and-a-half must be paid for hours worked over 40 in a week.

* This calculator is provided as a means for obtaining an estimate of tax liabilities but should not be used as a replacement for formal calculations and does not constitute the provision of tax or legal advice. The user assumes all responsibility and liability for its use.

Need help with your nanny taxes? Here’s a nanny tax calculator just for Sittercity families.

This post was provided by GTM, Sittercity’s nanny tax partner. GTM is a no-risk, no hassle way to manage nanny taxes and payroll. And just for Sittercity families, we’re waiving the $95 sign-up fee! Learn more here.