Connecticut Nanny Tax Rules
Our Guide for Connecticut 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 $49 a month. You can even try Poppins for free!*
If you pay a household employee such as a nanny, babysitter, caregiver or house manager more than $2,600 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.
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.
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 Connecticut Department of Labor, the Connecticut Department of Revenue Services, and the Connecticut Paid Leave Authority.
- 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 CT-W4 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 Connecticut obligations on the CT Department of Labor Website , the CT Department of Revenue Services Website and the CT Paid Leave Authority Website .
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 $49 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. You can even try Poppins for free!*
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 CT-W4: Have your employee complete this form which dictates how Connecticut 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 $2,600 in a calendar year, file Schedule H.
Connecticut Connecticut of New Hires: Complete this form to report your new employee to the State.
But if that sounds like too much, Poppins can take care of all these filings for $49 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.
Connecticut employers must give employees when hired a written notice of the pay rate, hours, payment schedule and any employment practices and policies like vacation pay, sick leave, and health benefits. Employers must also notify employee in writing of any changes.
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 and a Sample Caregiver Contract for your reference. This should give you a good idea of the issues that are usually covered.
The Connecticut minimum wage is $14.00 an hour. It will increase to $15.00 an hour on June 1, 2023. Beginning on January 1, 2024, increases in the minimum wage will be based on the employment cost index published by the U.S. Department of Labor.
Household employers in Connecticut must pay overtime at 1.5 times the regular rate of pay after 40 hours of work in a workweek. If your employee lives in your home, you do not have to pay overtime.
In Connecticut, household employees effectively must be paid by the hour, rather than by salary. The Poppins system ensures that all Connecticut payroll is hourly to comply with the law.
Connecticut household employees have the right to be paid weekly. An employer may pay in cash, by check or by direct deposit into an account at a financial institution of the employee’s choosing, with written consent of the employee.
Connecticut law requires employers to give employees an itemized paystub with every paycheck that includes the hours worked. Employers may provide the paystub in writing or, with the employee’s consent, electronically. With Poppins Payroll, all paystubs are emailed directly to your employee every payday. They are also available in your account to print.
Connecticut household employers are required by law to have workers' compensation insurance if their employee works 26 or more hours a week. Workers' comp insurance provides benefits to your employee in the event of an on-the-job injury. It can also limit an employer’s liability.
We’ve partnered with Bhalu Insurance, because they’re THE experts in Workers Comp Insurance for household employers. In fact, that’s literally all they do. Check out their site for a free quote or give them a shout. We think they’re pretty awesome.
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.
If a Connecticut employee is terminated, he or she must be paid on the next business day. If an employee quits, he or she must be paid by the next regular payday.
There are a number of other notices that Connecticut employers must post or provide to their employees.
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.
All Connecticut employers are required to make withholding for CT Paid Leave tax from their employee’s payroll and submit those amounts to the CT Paid Leave Authority quarterly. Not to worry, when you run payroll through Poppins, we calculate the paid leave withholding and submit them to the state with all the required reporting. The CT Department of Labor provides copies of the required forms and notices.
Connecticut employees must be provided with up to 12 weeks of unpaid leave during a 12-month period for qualifying family or medical leave reasons. CTFMLA leave may be taken for any of the following reasons:
- Birth of a child and care for the child within the first year after birth;
- The placement of a child for adoption or foster care and care for the child;
- Care for a family member with a serious health condition;
- Because of an employee’s own serious health condition;
- To serve as an organ or bone marrow donor;
- To address qualifying exigencies arising from a spouse, son, daughter or parent’s active-duty service in the armed forces; and
- To care for a spouse, son, daughter, parent or next of kin with a serious injury or illness incurred on active duty in the armed forces.
Employees may take up to 2 additional weeks of leave during the 12-month period for a serious health condition resulting in incapacitation that occurs during a pregnancy. In addition, employees can take up to 26 weeks of leave in a single 12-month period to care for a covered servicemember with a serious injury or illness. The CT Department of Labor provides copies of the required forms and notices.
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.