Hiring a Nanny in New York and Calculating Payroll and Withholdings with an Excel Spreadsheet

We've had two periods where we've employed a nanny in New York State. There are plenty of nanny payroll services, but they run from $240/yr to over $1000/yr. Instead of paying for a service to hire the nanny, handle payroll, and calculate withholdings, I did it myself. After setting yourself up as a household employer, the main upkeep is running payroll, which I handle with a fairly in-depth Excel spreadsheet. The spreadsheet could be modified for other states, as most of the principles are the same.

I used a couple different resources:

• Park Slopes Parents has some great information on paying a nanny on the books, including how to set yourself up as a household employer both on a Federal and New York level.
  
• Pixel Theory also has the same information, but for Washington state. I used them both to figure out what accounts I needed to set up, and what recurring tasks I had to perform. This is where I got the Excel spreadsheet that I modified.
  

In summary, the steps to hiring and paying a nanny on the books in New York State are as follows (I also recommend referencing the above links as they go in more detail):

• Initial
• Get an EIN online with the IRS
• Register with the New York State Department of Labor
• Have nanny fill out form I-9 and keep for your records
• Report hiring a nanny within 20 days to New York State
• Give written notice of the rate of pay, overtime rate of pay, regular payday (required to be paid weekly in New York), and other required info (sample form). You must update this yearly unless information is unchanged.
• If you are withholding state income taxes, have nanny fill out IT-2104 and pay those withheld wages quarterly with your NYS-45 web file
• If you are withholding federal income taxes, have nanny fill out W-4
• When you receive a state Unemployment Insurance rate, make note of it for calculating your payroll (this will be updated yearly)
• Quarterly
• Pay taxes and report wage info via form NYS-45 web file under Employment and Withholding Taxes > NYS-45 web file (register here first). They are due 30 days after each quarter ends, even if no wages. Make sure to close account via form IA-15 if you no longer employ a nanny.
• Yearly
• File Schedule H (Form 1040) with your tax return to pay Medicare, SS, and FUTA
• File forms W-2 and W-3 under Report Wages to Social Security and provide two copies of form W-2 to nanny before January 31
• On nanny leaving the job
• Provide nanny with W-2 within 30 days
• Give person a Record of Employment (IA 12.3)

Anyway, here is the spreadsheet I created by modifying the one I found on Pixel Theory. The first tab is called Pay Stub:

It displays the current pay period info, as well as the year-to-date info, including withholdings and employer contributions. All the information is pulled from the second tab, called Hours Log: 

This tab has a row for each pay period. Each row includes its own pay rate, so you may give raise mid year. The Pay Stub tab automatically updates with the most recent filled out pay period row, while this tab keeps a history of all previous pay periods. This tab has some instructions on using the spreadsheet at the bottom. It also has a few yellow cells which need to be updated every year (depending on your unemployment tax rate, and the state unemployment insurance limits). The pink cells only need to be updated if changed (FICA withholding rates, federal unemployment tax limits). In order to calculate the exact withholding amounts for federal and income taxes, this tab references a final tab called NY and Fed Withholding Tables:

This tab needs to be updated yearly. Input the nanny's information from the New York IT-2104 and the federal W-4 (2020 and later only). Use the comments on each cell to guide you on mapping the information. The two tables you will have to copy out of the NYS-50-T-NYS and 15-T guides from New York State and the IRS respectively. Again, the comments will tell you where to pull the information. The Hours Log tab references this tab to calculate the exact amount to withhold. 

Once you have this spreadsheet set up, running payroll is easy. Punch in the numbers on Hours Log, email a PDF of Pay Stub, and send a payment through Zelle, Cash, Apple Pay, check, or whatever you use to pay your nanny. 

Anyway, I hope this helps if you are looking to hire a nanny without committing yourself to a payroll service. It takes a bit of work to set up, but once done, you end up saving a considerable amount of money over the long run. If you have any feedback or corrections, let me know. If this post saved you some money and you want to make a donation, thanks!

Disclaimer: I am not an accountant and can't give financial advice. While I've gone through the formulas multiple times and use the spreadsheet myself, it is possible there are mistakes. There are other aspects to hiring a nanny in New York not mentioned in this post that you will want to familiarize yourself with (requirement for paid time off after 1 year, disability insurance requirement when 40 hours are met, requirement to pay weekly, etc).