nanny tax

Definition

A kind of tax paid to the federal government by people who employ live-in household helpers such as babysitters, cooks and gardeners. The principal of this tax is based on traditional employers who have to pay the various federal taxes such as social security and medicare taxes on their employer. Note that it is not all house helps that need to be paid the nanny tax, certain requirements needs to be met for this tax to be paid. For example, you don't have to pay the tax if the employee is under 18 or employed through an agency.
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