Nanny Taxes — Hiring a Nanny in Washington State (Seattle)

by on April 1, 2010 at 6:27 pm

If you live in Washington State and hire a nanny, here is the process you need to go through:

  1. Get an EIN: If you pay your nanny more than $1700 in a year (the limit for 2010), you need to pay the federal ‘nanny tax’. You will need to get an Employer Identification Number from the IRS. That can be done easily online or over the phone. Learn more or apply here. Cost: Free
  2. Get a WA State UBI: If you pay your nanny more than $1000 in any quarter, you must pay WA state unemployment taxes. In order to do so you need to get a WA State UBI (Unified Business Identifier). You’ll need your EIN. You can request one online here (although it takes them a few days to actually grant the UBI number). Cost: $15
  3. Receive your WA State Unemployment Tax Notice: You don’t need to do anything specific for this. When you request your UBI, you will automatically be sent an Employment Security Department Tax Rate Notice. This notice tells you how much you have to pay for Unemployment Insurance. We have to pay 1.92% for 2010.

When you hire the nanny, you need to take several steps:

  • Have her fill out a W-4: Documents her SSN and identifies withholdings. Keep this for your records, you do not need to file it. The dependent care form W-10 does not apply if you are hiring a nanny. Available here (pdf).
  • Have her fill out an I-9: Establishes her employment eligibility. Keep this for your records, you do not need to file it. Available here (pdf)
  • Report new hire to DCS. WA State requires that all new hires be reported to the Department of Child Services (DCS) so they can check to see if backup withholding is necessary. You can do that online here.

OK, you and your nanny are now legit.

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