Oregon Nanny Tax Rules

Our Guide for Oregon Household Employers

Need help with the legalese around nanny taxes? Trying to figure out how to pay your household employee the right way?

We’ve put together a bunch of useful info for you here. If it still seems like too much, we can handle everything for $45 a month. The first month is even free!

Am I a household employer?

If you pay a household employee such as a nanny, babysitter, caregiver or house manager more than $2,300 a year or $1,000 in a quarter to perform work in your home (or occasionally even out of your home such as in a nanny share), you are a household employer.

Why pay nanny taxes?

There are important benefits to following the law. It gives your employee Social Security, Medicare and Unemployment Insurance benefits. It also allows her to build her credit. Paying legally sets you up to take advantage of tax credits for dependent care. Finally, you never know when you might get nominated for the Supreme Court. And, we all know how that ends if you haven’t paid your nanny taxes.

So what are my tax obligations as a Oregon household employer?

As a household employer, you must comply with certain tax obligations, commonly referred to as the “nanny taxes” or “household payroll taxes.” It’s complicated, but generally, after you have registered as an employer with all the appropriate agencies, you must:

  • Register – You need to obtain a Federal Employer Identification Number and register with the Oregon Secretary of State.
  • Report your employee – All employees must be registered with the State within 20 days of hiring.
  • Payroll - At every pay period, withhold Social Security, Medicare and income taxes from the employee’s paycheck per the employee’s W4 and M-4 elections and make employer contributions to the Social Security and Medicare and unemployment funds.
  • Quarterly - submit the proper paperwork and payments to the correct agencies. The agencies will typically include the IRS and the State.
  • Year-End - provide your employee with his or her W-2 form, submit such information to the Social Security Administration, submit state reconciliations and prepare a Schedule H to file with your individual tax returns.

You can find all the information about your federal obligations in the IRS’s Publication 926 – Household Employer’s Tax Guide and your Oregon obligations in Oregon’s Employer Guide.

The IRS estimates that it would take you 60 hours to comply with the federal nanny tax regulations. That does sound, well, taxing. Poppins can take care of all of it for $45 a month! That includes all your state and federal registrations, new hire reporting, payroll calculations and direct deposit, quarterly state and federal filings and the year-end documents for you and your employee. This first month is even FREE!

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What are the required tax and legal forms?

If you decide to handle payroll and taxes yourself, you’ll need to know about these forms:

Form I-9: Have your employee complete this form when hired and provide the required proof of ID.

Form W-4: Have your employee complete this form which dictates how federal income tax is withheld.

Form 1040-ES: On a quarterly basis send this form to the IRS along with payment to report taxes from previous quarter. Don’t forget that federal quarter dates do not always line up with calendar quarters!

Form W-2: Fill out Form W-2 if you pay wages of $1,000 or more, and give Copies B, C and 2 to your nanny. Copy A (along with Form W-3) goes to the Social Security Administration.

Schedule H: If you pay your nanny cash wages of $1,000 or more in a calendar quarter or $2,300 in a calendar year, file Schedule H.

Oregon Directory of New Hires: Complete this form to report your new employee to the State.

M-4: Have your employee complete this form which dictates how Oregon income tax is withheld.

But if that sounds like too much, Poppins can take care of all these filings for $45 a month! We gather all the information we need from you during signup, generate your forms through our system, make all the appropriate tax calculations, and submit everything on your behalf.

Do I need to have a written contract with my employee?

If your employee works 16 or more hours a week, you must have a written employment agreement signed by you and your employee that includes: the regular and overtime rate of pay; raises or increases in pay for added duties or skills; work schedule and job duties; rest periods, sick leave, holidays, vacation and personal days; any other benefits; any charges or pay deductions; the eligibility for workers’ compensation; the process for raising and resolving concerns; and the notice of termination by you or employer. For live-in employees, the agreement must also specify why and when the employer will enter your living space, and “cause” for termination. This agreement must be in written in a language that the employee understands. The Oregon Attorney General has template employment agreements in English, Spanish and Portuguese.

It is a really good idea to have a written employment agreement with your employee. A written employment agreement spells out the obligations of both parties, including hours, compensation, duties, benefits and PTO. This is really important if the relationship doesn’t work out, and there is ever a dispute. Just as important, it helps you discuss the important issues with your employee at the outset. This way you make sure you have a good relationship and understanding before you even start.

We’ve put together a Sample Nanny Contract. This should give you a good idea of the issues that are usually covered.

What other laws do I need to know about?

Time is money

MINIMUM WAGE

The Oregon minimum wage depends on the location of your workplace: $11.50 per hour for Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler Counties. $12.00 per hour for Benton, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Polk, Tillamook, Wasco, Yamhill, and parts of Clackamas, Multnomah, & Washington outside the urban growth boundary. $13.25 per hour within the urban growth boundary, including parts of Clackamas, Multnomah, and Washington Counties. The minimum wage will increase to $12.00, $12.75, and $14.00, respectively, on July 1, 2021.

OVERTIME

Household employers in Oregon must pay overtime at 1.5 times the regular rate of pay after 40 hours of work in a workweek. You must also pay overtime if your employee lives in your home and works more than 44 hours a week.

SALARY OR HOURLY WAGES?

Your employee is entitled to minimum wage and overtime regardless of whether they are paid hourly or salary. If they are paid by salary, it is best practice to document the hours worked (and the pay rate) included in the salary amount.

PAYSTUBS

Oregon law requires employers to give employees an itemized paystub with every paycheck. With Poppins Payroll, you can have paystubs emailed directly to your employee every payday.

PAY PERIODS

Oregon household employers are required to pay employees on a regular schedule and paydays can be no more than 35 days apart.

WORKERS’ COMPENSATION INSURANCE

Oregon does not require household employers to obtain Workers’ Compensation Insurance. If you elect to obtain Workers’ Compensation Insurance, you are then subject to the Oregon Workers’ Benefit Fund (WBF) assessment. As most household employers in Oregon do not obtain Workers’ Compensation Insurance, Poppins is not set up to make WBF assessments on behalf of our clients. So, if you elect to obtain Workers’ Compensation Insurance, you will have to handle registering for WBF and paying WBF assessments.

MILEAGE REIMBURSEMENT

If you choose to reimburse your employee for driving on the job, you can use the current federal mileage reimbursement rate. Mileage reimbursement is not considered taxable compensation. To ensure the amount is not taxes, enter mileage reimbursements as a “Reimbursement” amount on your payroll.

TERMINATION WAGES

If an Oregon employee is terminated, he or she must be paid their accrued wages by the end of the next business day. If the employee quits, he or she must be paid on the earlier of the next regular payday and 5 business days.

POSTING REQUIREMENTS

There are a number of other notices that Oregon employers must post or provide to their employees.

PAYROLL RECORDS

Household employers must keep accurate records of hours worked by employees and wages paid on an ongoing basis. These records must be kept for at least 3 years. With Poppins, we’ll keep all this information in your online filing cabinet, which you’ll be able to access even after you’re not using us to run your payroll.

REST PERIODS

Employers must provide domestic workers with 24 consecutive hours of rest per week, and eight consecutive hours of rest per day if living with the employer.

PAID TIME OFF

Employers must provide at least 3 paid personal leave days off to domestic workers who worked an average of at least 30 hours per week during the previous year.

SICK LEAVE

Oregon employers with less than 10 employees must provide each employee not less than one hour of unpaid sick leave for every 30 hours worked. Once the employee has worked for 90 days, they can start taking sick leave. An employer may cap the annual accrual of sick leave for each employee at 40 hours. With Poppins, you can track sick leave right in our system and the balances will be automatically included on your employee’s pay stubs based on the polices you set up.

OregonSaves

OregonSaves is a state retirement program.  Oregon employers are required to register and provide their employees with the opportunity to save through payroll deductions (unless the employer offers another qualified retirement plan).  Employees are automatically enrolled into the Program unless they opt out within 30 days after notice of their enrollment.    

Poppins does not handle your registration with OregonSaves or make your payments to OregonSaves.  With Poppins, you can enter the percentage elected by your employee and the OregonSaves contributions will be reflected on your employee’s paystubs.  You will still need to submit the payments to OregonSaves on behalf of your employee.

THE CONTENT OF THIS WEBSITE IS GENERAL AND INFORMATIONAL IN NATURE AND MAY NOT BE APPROPRIATE FOR YOUR SPECIFIC CIRCUMSTANCES. THE INFORMATION IS NOT INTENDED TO PROVIDE LEGAL OR TAX ADVICE, AND SHOULD NOT BE RELIED UPON WITHOUT CONSULTING WITH AN ATTORNEY AND/OR TAX PROFESSIONAL.

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