Preparing for Nanny Taxes: The Nanny Tax FAQ
Nanny taxes aren’t fun, but armed with proper information, they can be made easy. Here at Tax4Nanny, we are often asked questions regarding the nanny tax and how to best prepare for it. Don’t let taxes get you down, hire a nanny tax service and never look back.
What Are Nanny Taxes?
If you employ a nanny, live-in or live-out, you are on the hook to cover their nanny taxes. This requires you to withhold money to cover CPP, EI, and other federal payments. Failure to do so can lead to an audit by the Canadian Revenue Agency.
Are Nanny Taxes That Important?
Here at Tax4Nanny, we think so. While you could pay your nanny under the table, this is not recommended. As previously mentioned, you face the risk of being audited by the CRA and it sets a bad example for your employee. By taking care of their nanny taxes, your employee will feel more secure in their job and they will be more likely to show job loyalty.
How Much Do Nanny Taxes Cost?
This varies province to province. In 2018, a live-in nanny working 44 hours a week at gross $14 per hour in Ontario will cost you $1,328 every two weeks. This includes a $363 deduction for federal tax, provincial tax, CPP, and EI. Your nanny will take home $965.
An important point to remember, “free” room and board provided to live-in nanny is a taxable benefit and it will be become a component of taxable income.
In addition, WSIB premium will cost you $237 every three months.
Paying your nanny tax will also provide you with tax deductions. As an employer, you are entitled to certain tax credits and deductions.
Tax4Nanny specializes in nanny taxes. Our comprehensive nanny tax service is offered to clients in Toronto, the GTA, Ontario, and all of Canada. If you have any questions, please feel free to contact us today. We would be more than happy to answer any questions that you may have.