New York Nanny Tax Rules
Our Guide for New York Household Employers
Need help with the legalese around New York nanny tax rules? 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 $2,400 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 New York 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 State of New York.
- 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 IT-2104 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 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 New York obligations in the New York Employer’s Guide to Unemployment Insurance, Wage Reporting, and Withholding Tax.
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!
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 $2,400 in a calendar year, file Schedule H.
New York Directory of New Hires: Complete this form to report your new employee to the State.
IT-2104 (IT-2104-E for exempt employees): Have your employee complete this form which dictates how New York, New York City and Yonkers income tax is withheld.
NYS- 100: File this application to establish your New York Withholding Account and your New York Unemployment Insurance Tax Account.
NYS-45: On a quarterly basis file these reports with the State along with payment to report taxes and wages paid in the previous quarter.
NYS-1: Use this form to report wages and remit payment, whenever the total accumulated withholding equals or exceeds $700.
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?
New York household employers are required to provide employees with a written notice at the time of hire (and prior to any subsequent changes) stating: 1) the regular rate of pay, 2) the overtime rate of pay, and 3) the frequency of pay. The notice must be given both in
English and in the employee’s primary language (if the Labor Department offers a translation). The Department currently offers translations in
Burmese , and
Employers must have each employee sign and date the completed notice and provide them with a copy. Household employers must also provide written notice of their policies on sick leave, vacation, personal leave, holidays and hours of work.
You are not otherwise required by law to have a written employment agreement with your nanny or household employee. Still, 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.
If you decide to go this route, 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.
What other laws do I need to know about?
New York’s minimum wage is $13.20 per hour.
The New York City minimum wage rate is $15 per hour.
The minimum wage rate for Long Island & Westchester is $15 per hour.
ADDITIONAL HOUR OF PAY FOR MINIMUM WAGE EMPLOYEES
For household employees who make exactly minimum wage, New York state law provides that an employer is obligated to pay for an additional hour for any day in which the employee works more than 10 hours (from the start of the day to the end of the day). This includes if the employee works a split shift in the workday with nonconsecutive work hours (e.g. 8:30 am to 11 am and 3:00 pm to 6:00 pm in the same day).
Household employers in New York must pay overtime at 1.5 times the regular rate of pay after 40 hours of work in a calendar week. If your employee lives in your home, you must pay your employee overtime after 44 hours of work in a week.
SALARY OR HOURLY WAGES
In New York, household employees must be paid by the hour, rather than by salary. The Poppins system ensures that all New York payroll is hourly to comply with the law.
New York 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.
Household employees must be paid weekly. All payroll through Poppins is weekly to comply with the law.
WORKERS’ COMPENSATION INSURANCE
Poppins Payroll does not provide insurance policies and if required in an employer’s situation, an insurance policy would need to be purchased separately by the employer. Household employers in New York must provide workers compensation to household employees who work 40 or more hours per week. Employers must post a notice of workers' compensation coverage (Form C-105) obtained from their workers' compensation carrier. Please note that the workers’ compensation insurance rider of a homeowner’s insurance policy does not cover any domestic employees in New York for workers’ compensation benefits. Information on obtaining coverage on the Workers Compensation Board website.
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.
Poppins Payroll does not provide insurance policies and if required in an employer’s situation, an insurance policy would need to be purchased separately by the employer. Household employers in New York must purchase insurance to provide disability benefits to employees who work 20 or more hours per week. Such insurance can be purchased from a private insurance company or the State Insurance Fund.
PAID FAMILY LEAVE INSURANCE
Poppins Payroll does not provide insurance policies and if required in an employer’s situation, an insurance policy would need to be purchased separately by the employer. Household employers in New York must purchase insurance coverage to provide Paid Family Leave to household employees who work 20 or more hours per week. Domestic workers are eligible for benefits once they have been in employment for 26 consecutive weeks. New York’s Paid Family Leave provides employees with job-protected, paid time off to bond with a newly born, adopted, or fostered child, care for a family member with a serious health condition, or assist loved ones when a family member is deployed abroad on active military service.
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.
DAY OF REST
Domestic workers are entitled to a day of rest (24 hours) in each calendar week. Your employee can agree to work on his or her day off, but all hours worked on the day of rest should be paid at the overtime rate.
PAID DAYS OFF
The Domestic Workers Bill of Rights requires that a household employer must give his or her employee at least 3 paid days off after one year of work.
Employers are also required to provide a Record of Employment (IA 12.3) to every employee who quits, is laid off, or is discharged.
All employers are required to post certain notices, including a minimum wage notice, for the benefit of their employees.
STATE WITHOLDING ALLOWANCES AND EXEMPTIONS
The IT-2104 specifies your employee’s withholding details for state personal income tax. If your employee claims over 14 allowances, you must send the IT-2104 to the state at: NYS Tax Department, Income Tax Audit Administrator, Withholding Certificate Coordinator, W A Harriman Campus, Albany NY 12227-0865. If your employee is claiming that he or she is exempt from state personal income tax, the employee must complete the IT-2104-E, and must fill out a new form every year.
WITHOLDING OF $700 OR GREATER
Income tax withholdings are typically remitted on a quarterly basis. However, in New York, if your state income tax withholdings equal to or exceed $700 during a calendar quarter, you must remit those amounts to the state within 5 business days. Don’t worry, the Poppins system is setup to handle this requirement!
NEW YORK STATE SICK LEAVE
All employers in New York must provide their employees with sick leave. Sick leave must accrue at a rate of at least one hour of leave for every 30 hours worked or be provided up front for the whole year. For household employers with less than 5 employees, the sick leave can be unpaid.
NEW YORK CITY SICK TIME
Employers in New York City with a domestic worker who works more than 80 hours a calendar year must provide 40 hours of paid safe/sick time per year. Safe/sick leave must accrue at a rate of at least one hour of leave for every 30 hours worked or be provided up front for the whole year. Safe time and sick time accrued by a domestic worker will carry over to the next calendar year. You must provide written notice of these benefits to employees when they are hired.
WESTCHESTER COUNTY SICK AND SAFE TIME LEAVE LAWS
Employers in Westchester County with a domestic worker who has worked for the employer for at least a year and who works more than 80 hours a calendar year must provide up to 40 hours of paid sick time in a year. Domestic workers accrue one hour of earned sick time for every 7 days worked.
Westchester County employers must provide employees who work more than 90 days in a calendar year with 40 hours
of paid safe time leave. Safe time leave can be used by employees who are victims of domestic violence or human
trafficking to (i) attend/testify in criminal and/or civil court proceedings relating to domestic violence or
human trafficking; and/or (ii) to move to a safe location.
Westchester County Employers must provide employees with copies of both the Sick Leave Law and the Safe Leave
Law. Employers must also provide a Sick Leave Notice and a Safe Leave Notice. Finally, employers must post a
Sick Time Notice and a Safe Time Notice in English, Spanish or another language, as appropriate.
COVID VACCINATION TIME OFF
Until December 22, 2022, Employees receiving the COVID-19 vaccination must be provided with a paid leave of absence from their employer for a sufficient period of time (up to four hours per vaccine injection). Time must be paid at the employee’s regular rate of pay for each COVID-19 vaccine injection. This leave of absence for the COVID-19 vaccination cannot be charged against any other leave, such as paid time off, sick leave. In. New York City, this requirement also applies to employees who are having a child vaccinated.
NY HERO ACT
The NY Hero Act requires employers to put in place an airborne infectious disease exposure prevention plan, either by adopting one of the various industry-specific model plans released by the New York State Department of Labor or by establishing an alternative plan that meets or exceeds certain minimum requirements. Employers must implement their prevention plan whenever an airborne infectious disease is designated by the New York State Commission of Health as a highly contagious communicable disease that presents serious risk of harm to the public health.
SEXUAL HARRASMENT POLICY
Every NY employer must adopt a sexual harassment prevention policy. Employers must also provide sexual harassment training to their employees. The state has provided a model policy and a model training program.
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 6 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.
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.