Your Nanny Problem

Simplified Tax Forms for Your Au Pair? Au Contraire


Published in the Sunday New York Times on January 18, 1998

Are you a New Jersey working parent who employs a nanny? Have you recently decided to begin paying the nanny tax because fear, guilt or insanity has finally gotten the best of you? Then I’d like to share with you the secrets of complying with the nanny tax.

To begin, forget all that stuff you’ve read about how payment of the nanny tax has been simplified. That’s the Federal nanny tax. The New Jersey State nanny tax forms resemble something designed by Escher and authored by Joyce. Nonetheless, you’ll need to understand each of them, for they will become your constant companions.

Form UC-1 (Status Report of Employing Unit)

Before you are granted the privilege of paying the nanny tax, you must file Form UC-1 to request an employer registration number. Unfortunately for you, UC-1 was never designed for parents who hire nannies. Be prepared to complete 14 sections of complex questions to tell the state, “Hey, I’ve hired a nanny.” But with a little forethought, some educated guessing, and several calls to your accountant, you can probably fill out Form UC-1 in less time than it takes to quit your job and care for the child yourself. After filing UC-1, you’ll receive a letter from the Supervisor of Status Determinations which basically says, “You’re right, you did hire a nanny.” Only the Supervisor takes six paragraphs to say it, beginning with “BASED ON AVAILABLE INFORMATION, WE HAVE DETERMINED YOU ARE AN EMPLOYER SUBJECT TO THE NJ UNEMPLOYMENT COMPENSATION LAW UNDER SECTION 19H13.” (Maybe after the government solves the year 2000 problem, they can solve its OUR CORRESPONDENCE IS IN ALL CAPITAL LETTERS problem.)

Form WR-30 (Employer Report of Wages Paid)

You must list on Form WR-30 the nanny’s name, Social Security number and wages paid. Form WR-30 must be returned by the 13th day after the end of each calendar quarter. But the really tricky part is figuring out the column called Base Weeks During Which Employee Earned $133 or More. No one knows why $133. But Base Weeks seems to have something to do with the fact that some weeks don’t fall neatly into a single quarter, the creator of the Gregorian calendar not being prescient enough to anticipate the nanny tax.

Form UC-27 (Quarterly Contributions Report)

So you know how much you owe. Now you must complete Form UC-27. There’s some amazingly unfathomable stuff on this form, even for the government. Take Item 1A, which requests the “Number of covered workers employed during the pay period which includes the 12th day of each month.” The form comes in the same packet as Form WR-30 and there’s only one return envelope. Another head-scratcher is Item 1B, which requests the “number of women employed during the pay period which includes the 12th day of the 3rd month only.” The idea is probably to ensure that adequate numbers of women are being employed, obviously one of the burning issues in the area of nanny employment. Form UC-27 even has a space to “enter the taxable wages of covered workers who have filed a waiver of benefits rights … because of adherence to the faith of any church, sect, or denomination that, in the practice of religion, depends for healing upon prayer or spiritual means.” Translation: if you want to save a few bucks on the nanny tax, hire the next Jehovah’s Witness that shows up on your doorstep.

Catastrophic Illness in Children Relief Fund (CIF)

Once a year, you’ll receive an assessment of $1 per employee to “aid families who have incurred extraordinary medical expenses due to a child’s illness.” Since you only have one employee, your CIF assessment for the year will be $1.00. This will not cover the state’s postage and handling costs, let alone leave anything for seriously ill children.

See how easy that was? It’s hard to believe you were thinking that compliance would be more trouble than it’s worth. If you have any further questions, I’m sure you’ll find the answer in the 151 pages of regulations provided for you in the New Jersey Employer Handbook. Oh, and when you’re not busy complying with the nanny tax, try to spend a few minutes with your kids.