U.S. Household Employment Taxes: Nanny Tax Calculator

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Clients: if you are making the election to pay SS/Medicare on the worker's behalf (see below Special Treatment) please do not use this calculator. Use the calculator provided inside your login when you enter the worker's record.

Gross-up from net pay:
If you want to pay your worker a gross pay amount which is equivalent to a certain amount of net pay use this calculator.

Enter the net wages and select your state before clicking on the Submit button. This will gross-up for employment taxes such as social security, medicare, state disability.
Note: if you will be paying annual wages to any individual worker in excess of $87,900, or to any California worker in excess of $68,829 the gross-up calculation will be accurate only if annualized because of certain taxable wage maximums.
IMPORTANT: Be aware that it is not possible accurately to calculate gross-up for income taxes because income taxes depend upon a whole constellation of factors which are accounted for on an individual worker's own income tax forms.

If your worker is used to being paid under-the-table, you may want to negotiate their gross pay to take into account that their wages will now be reported to the tax authorities. The worker may or may not incur tax expenses as a result of this, depending upon their total situation. Remember that the under-the-table payments have always been illegal, and that all subject wages are supposed to be reported to the tax authorities.

To get an idea of the applicable income taxes, you may want to use the gross-to-net calculator (the Calculate button above) on a trial-and-error basis to see how much income tax deduction is generated by a given amount of gross wages. Understand that this will only show what the withholding tables prescribe, not what the worker's actual tax liability will be.

SPECIAL TREATMENT ALLOWED FOR SOCIAL SECURITY AND MEDICARE
The tax regulations currently allow a Household Employer to pay the worker's portion of certain employment taxes (NOT income taxes) specifically social security and medicare, on behalf of the household worker, without incurring additional employment tax liability on those amounts.

The employment taxes paid on the worker's behalf must be added to the worker's wages for income tax and reporting purposes. This does add some complexity to the recordkeeping and calculation, and especially so if you are deducting income taxes for the worker. There is a reduction **?** in total employment taxes paid. You must decide for yourself whether the added complexity is worth the difference in total tax paid.

If for simplicity you choose instead not to use this election, you can use the calculator above simply to adjust the gross wages (i.e. gross-up) to reflect the employment taxes.

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