A.  No.  Parents are legally allowed, but not required, to withhold federal income taxes from a nanny’s wages.  (Note:  Federal income tax is NOT the same as Social Security and Medicare taxes.)

Some parents withhold federal income tax as a courtesy.  Some nannies, however, prefer to be fully responsible for paying their own income taxes.  A good nanny contract should alert parents to this option, allowing an informed choice.

If parents decide to withhold a nanny’s federal income taxes, the nanny needs to complete and give the parents IRS Form W-4.  For states that have income taxes, the nanny should also complete the equivalent state form, which can usually be downloaded from the state’s department of revenue or taxation.