CNM CNM Legal & Employment Standards for Nannies

Question 1

In the United States, household employees such as nannies are classified for tax purposes as:

Accepted Answer

Employees, not independent contractors, in most circumstances

Answer

The IRS uses a behavioral and financial control test to classify nannies as employees in most households, meaning families must withhold and pay employment taxes.

Question 2

What is the 'nanny tax'?

Accepted Answer

Federal and state payroll taxes (Social Security, Medicare, unemployment) that families must pay when employing a household worker

Answer

The 'nanny tax' refers to the employer payroll tax obligations that arise when a family pays a household employee above the IRS threshold.

Question 3

Under the Fair Labor Standards Act (FLSA), live-out nannies are generally entitled to:

Accepted Answer

Minimum wage and overtime pay at 1.5x for hours worked over 40 per week

Answer

The 2015 FLSA domestic worker rule extended minimum wage and overtime protections to most live-out domestic workers including nannies.

Question 4

What document must a family provide to a household employee upon hiring to comply with IRS requirements?

Accepted Answer

Form W-2 by January 31 of the following year

Answer

Household employers are required to issue Form W-2 to employees who met the annual wage threshold, reporting wages and withheld taxes.

Question 5

Form I-9 is required in nanny employment because it:

Accepted Answer

Verifies an employee's identity and legal authorization to work in the United States

Answer

Form I-9 is a federal employment eligibility verification form required for all US employers, including household employers.

(CNM) Certified Nanny Manager Practice Test

(CNM) Certified Nanny Manager Practice Test

CNM CNM Legal & Employment Standards for Nannies