Understanding the “Nanny Tax” for your household employees.

Schedule H

If you employ a household employee, such as a maid, nanny, caretaker, yard worker, or driver, you could be subject to paying the “Nanny Tax”. This tax can encompass Social Security and Medicare (collectively known as FICA), FUTA, and SUI (state unemployment insurance tax).

The simplest way to pay these taxes is through filing a Schedule H at the end of the year and filing a quarterly Missouri Unemployment Tax.

Fortunately, you may not be required to pay all of these taxes – whether or not you have to pay these taxes depends on how much your household employee is earning….

If you do not exceed any of the thresholds set by the Federal and State laws, you will not pay any “Nanny Taxes”, and you will not have to file a Schedule H.

Understanding which thresholds you have exceeded can be complicated. The accountants at Hauk Kruse & Associates would like to simplify it for you:

Do I have to pay FICA?

If your employee is not

  • your spouse,
  • your child (under 21 years old),
  • your parent,
  • or under the age of 18

and you pay them more than $1,900 in a year, you DO have to pay FICA.

If you have to pay FICA, you pay a one-time amount at the end of the tax year and you will be responsible for paying a total of 7.65% of your employee’s wages. This includes the 6.2% for Social Security and the 1.45% for Medicare.

You are also responsible for making the payment for your employee’s portion of the FICA. You can do this two ways: by either withholding 7.65% from each of their paychecks or simply by adding it to your balance due on your Schedule H.

Do I have to pay FUTA?

If you employee is not

  • your spouse,
  • your child (under 21 years old),
  • or you parent

and you pay them more than $1,000 in a quarter, you DO have to pay FUTA. Once one quarter passes this threshold, all wages are subject for the entire tax year.

If you have to pay FUTA, you pay a one-time amount at the end of the tax year and you will be responsible for paying 0.6% of up to $7,000 in your household employee’s wages.

Your household employee will not have any withholdings on their paycheck in regards to FUTA.

Do I have to pay the SUI?

If you live in MISSOURI, you become liable for state unemployment when you meet any of the following requirements:

  • you pay your employee $1,000 in cash wages in a calendar quarter
  • you become liable under FUTA
  • you are determined to be a successor to a liable Missouri employer by DES staff

Unlike FICA or FUTA, the Missouri Unemployment Insurance Tax is filed and paid quarterly on MODES-4-7.

If you are required to pay the Missouri Unemployment Insurance Tax, you will pay quarterly and you will be responsible for paying 3.51% of up to $13,000 in your household employee’s wages.

Your household employee will not have any withholdings on their paycheck in regards to the Missouri Unemployment Insurance Tax.

If you live in a state other than Missouri and would like to know if you are required to pay your state’s SUI, please call our office at 314-993-4285.

If you have household employees and would like help filing your tax forms or understanding the “Nanny Tax”, please contact us at 314-993-4285 or at office@hkaglobal.com.


You must file all tax forms using an EIN. If you do not have one, you can apply for one online or we can file for one on your behalf.

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Notify your tax preparer if you purchase health insurance through the SHOP Marketplace!

MO Healthcare ExchangeIf you are an employer who has purchased their employee’s health insurance through the “Healthcare Exchange” or the “Small Business Health Options Programs (SHOP) Marketplace”, don’t forget to alert your tax preparer.

Beginning in the 2014 tax year, a new form (Form 1095-A) will be required for you, as will a few changes to your standard Form 1040.

You should also prepare for a delay in the preparation of your tax return, as there is an expected delay in the receipt of the Form 1095-A.

If you have any questions or concerns about the ACA, please call our office at 314-993-4285 or e-mail us at office@hkaglobal.com.

Important change to the small business health insurance tax credit!

IMO Healthcare Changesn accordance with changes to the healthcare law, the Affordable Care Act (ACA), beginning with the 2014 tax year small business employers will be unable to take a credit for employee’s health insurance unless the policies were purchased through the Small Business Health Options Programs (SHOP) Marketplace. However, if employers do purchase their employee’s health insurance through SHOP, the credit has increased from the previous amount of 35% up to a maximum of 50% of premiums paid.

If you have any questions or concerns about the ACA, please call our office at 314-993-4285 or e-mail us at office@hkaglobal.com.

Important Change to the Missouri Burden of Proof Law.

Previous laws stated that a taxpayer must meet certain requirements for the Director of Revenue to take on the burden of proof in tax disputes.

Seal_of_the_Senate_of_Missouri.svgOn September 10th the Missouri Legislature passed an act that removes all requirements, therefore putting the burden of proof on the Director of Revenue for all tax disputes and exception cases. This is an act that any taxpayer can benefit from, no matter what type of entity they are or what their net worth is, as it will help taxpayers and their CPAs in disputes with the Missouri Department of Revenue.

To read more about this bill, please go to the Missouri State Senate website.

If you would like to learn how this bill could affect you, please call our office at 314-993-4285.

New Bill Passed Benefitting Farmer’s Market Sellers

Farm_Fresh_2The annual Veto Session by the House and Senate convened on September 10th. During this session, the Legislature passed a bill to benefit farmer’s market sellers. This bill states that a person or entity with farm product sales under $25,000 is exempt from sales and use tax on all farm products sold at farmers’ markets.

To read more about this bill, please go to the Missouri State Senate website.

If you would like to learn how this bill could affect you, please call our office at 314-993-4285.

Important Change to Tax Credit Allotments.

Tax_Credits_1On September 10th, the Missouri Legislature overrode the veto by the Governor and passed a bill which increases the cap on tax credits for contributions made to maternity homes, pregnancy resource centers, and local food pantries.

To read more about this bill, please go to the Missouri House of Representatives website.

If you would like to learn how this bill could affect you, please call our office at 314-993-4285.