An update on the Nanny Tax

On October 22, 1994, the Social Security Domestic Employment Act of 1994 was signed into law. The main objective of the law was to simplify employment tax issues as they apply to employers of domestic employees such as housekeepers, gardeners and babysitters. For employers, the 1994 Act made 3 major changes: 1. The dollar amount of wages that must be paid to an employee before the employer is required to pay Social Security taxes was increased to $1000 per year. 2. The reporting provision was changed from quarterly to annually. 3. Wages paid to workers under the age of 18 are exempt from Social Security taxes.