If you are required to report and pay employment taxes, you will need an employer-identification number, or EIN.  An EIN is a nine-digit number issued by the IRS.  EINs follow the following format:  00-0000000.  You apply for an EIN by  completing Form SS-4 and mailing it to the IRS.  A copy of Form SS-4 is included with the NannyPay software package.

In the new year, you must also provide to your household employee a Form W-2, which reflects wages paid to your nanny and taxes withheld during the previous year.  You must send the completed Form W-2 to both your nanny and the Social Security Administration (SSA).  Generally, these forms must be filed (sent) to your nanny by January 31 of the following year and to the SSA no later than February 28 of that following year.

You may also have to make advance Earned Income Credit (EIC) payments to your nanny if he or she is eligible and provides you a properly completed Form W-5.  NannyPay software will make EIC calculations,  if you choose the appropriate federal option.  See Setting Up NannyPay Software.   EIC payments made to your nanny will reduce the amount of Social Security, Medicare and federal income taxes you need to pay to the IRS at the end of the year. 

Generally, if you give your nanny a copy of Form W-2 by the due date, this form has a notice about the EIC on the back.  If you do not, you are required to provide your nanny with a separate notice about the EIC, known as Notice 797, no later than the first week of February of the year following the year in which you paid the wages.

Make sure you keep and retain accurate records in case the tax man cometh!