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How the Nanny Tax Helps Your Employee In Her Golden Years

by Breedlove February 2, 2012

If you're a household employer and you've recently prepared and distributed a Form W-2 to your employee, don't forget that a copy of the W-2 needs to go to the Social Security Administration (SSA) by the end of February.  It's the employer's responsibility to file the 2011 W-2 Copy A and W-3 with the SSA on behalf of each employee who was paid $1,700 or more during 2011 (the 2012 threshold is $1,800).

 

This part of the "nanny tax" paperwork ensures that your employee receives the proper "earnings credits" from the SSA.  These credits are used to calculate the amount of benefits she will receive during retirement.  Retirement benefits are based on an income replacement formula that factors the worker's highest 35 years of earnings.  So, the greater her earnings credits, the more golden her golden years will be.

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