Federal Withholding Option: Federal law does not require you to withhold income tax from your household employee's salary unless you both agree to withhold. See "Determining What Taxes You Must Withhold." If you check this box, NannyPay will calculate the appropriate amount of withholding.
Social Security Option: If you will pay your household employee $1,800 or more this year in gross wages, you are required by federal law to withhold and pay Social Security and Medicare taxes, which are sometimes collectively referred to as FICA taxes. One half of the total FICA tax you owe the government is withheld from your household employee's wages. NannyPay will automatically calculate the correct amount of FICA withholding.
Employer Paid FICA Option: Check this option if you intend to pay your household employee's share of FICA (Medicare and Social Security) taxes. For a more complete explanation refer to Step 4: Determining What Taxes You Must Withhold.
Allowances: Information concerning the number of allowances claimed by your household employee can be obtained from your his or her federal W-4 form. Failure to enter this information may result in inaccurate withholding calculations.
Filing Status: Information concerning your household employee's filing status can be obtained from his or her federal W-4 form. Failure to enter this information may result in inaccurate withholding calculations.
Additional Withholding: If your employee's Form W-4 requests additional amount to be withheld each pay period, then enter the amount here.
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Choose Your State: This is a standard Windows drop down box. Click on it and choose the state in which your household employee will work. This is a required option that will permit NannyPay to calculate the correct state withholding. NannyPay will not permit you to calculate withholding unless you have selected a state.
State Withholding Option: Most states follow the federal rule. That is, if both you and your household employee agree, you may withhold state income tax from your household employee's wages; otherwise, you have no obligation to withhold state income tax. See "Determining Which Taxes You Must Withhold."
Local Tax Options: Your local municipality may require you to deduct a wage tax from your employee's pay. NannyPay automatically supports local taxes for many municipalities. If you live in a municipality that has a wage tax but does not appear in the drop down list, choose the appropriate method from the drop down list and enter the applicable information for rate, wage base and name of the municipality. NannyPay will automatically deduct the amount from your employee's gross wages.
Other Adjustments to Net Pay: Enter any amount you wish to be automatically deducted from or added to your household employee's net wages. To enter deductions, type a negative amount; to enter a payment, type a positive amount. This feature is useful for deducting local taxes not supported by NannyPay, or any other type of deduction or payment.
Employee-Paid Unemployment Tax Rate: The "Unemployment Tax" withholding rate is generally a percentage of gross wages that a state may require you to withhold from your household employee's wages. Each state has different rules and some states may not require you to withhold any unemployment compensation contributions. Enter the appropriate percentage in this box and NannyPay will calculate the correct withholding. If you enter nothing, NannyPay will not calculate unemployment compensation contributions. If your state calculates unemployment compensation contributions based upon a different formula other than percentage of gross wages, NannyPay cannot do the calculation; however, if you manually calculate your household employee's contribution and type the result in the "Other Deductions" box, NannyPay will automatically deduct it from net wages.
Employee-Paid Unemployment Tax Wage Base: The taxable wage base is the amount of gross wages that are taxable. If your employee's gross wages exceed the amount of the wage base, NannyPay will automatically stop calculating local taxes. If your state has no wage base requirement, leave the box blank.
Employer-Paid Unemployment Tax Rate: States often require employers as well as employees to pay unemployment tax. The rate and wage base permit NannyPay to calculate your unemployment tax liability. If you know your state's employer unemployment tax rate enter the percentage in the rate box.
Employer-Paid Unemployment Tax Wage Base:The taxable wage base is the amount of gross wages that are taxable. If your employee's gross wages exceed the amount of the wage base, NannyPay will automatically stop calculating local taxes. If your municipality does not use a wage base, leave the box blank.
Exclude Employer-Paid FICA Option: The Exclude Employer-Paid FICA Option is enabled if you pay your employee's share of FICA. Some states require that when computing employment taxes, the taxable wages exclude FICA paid on behalf of your employee. If your state has no wage base requirement, then check this box.
Additional State Withholding Tax: If your employee requests additional state withholding to be deducted from his or her pay check, then enter the amount in the box for additional state withholding.
State Specific Options: If your state has an income tax, the state specific tab may contain special settings particular to your state. The tab for Pennsylvania is illustrated above.
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Payment Frequency: NannyPay permits all recognized payment frequency options: daily, weekly, biweekly (every two weeks), semi-monthly (twice a month), monthly, quarterly, semi-annually and annually. Click on the applicable "radio button."
Note: There has been some confusion over which payment frequency you should choose. If you pay your household employee on a weekly basis then you choose the weekly schedule; if you pay her every two weeks, choose the biweekly schedule, and so on. If, for example, you have chosen a weekly schedule, it only means that you pay your employee weekly, whether or not your employee actually works a full week or just a single day of that week. Thus, if your employee were to work only a single day during a week, it would be incorrect to pay her for that week using the daily payment frequency; you must still use the weekly schedule.
Payment Methods: NannyPay permits three payment methods: salaried, hourly or combined salary and hourly. If you pay your household employee a salary, click the salary "radio button" and enter his or her salary in the box. If you pay your household employee an hourly wage, click the hourly wage "radio button" and enter the appropriate rate in the box. Likewise, if you pay your household employee a combined hourly wage and salary, click the appropriate "radio button" and enter the wage and salary information.
Overtime Multiplier: NannyPay permits you to enter a multiplier for overtime wages for hourly and salary/hourly employees. The default value is 1.5 times regular pay. For more information about which multiplier to use, see Determining How Much to Pay Your Household Employee.
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State Options
