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ABC7 News Online - Tax Tips 2005: Part 3

Link: ABC7 News Online - Tax Tips 2005: Part 3.

Don't get caught by the "Nanny Tax" It makes for headlines when a presidential appointee goes down in flames for failing to pay payroll taxes for a nanny or other household employee. The fact is, these same rules apply to other taxpayers, too. In general, the JK Lasser Income Tax guide points out that individuals paying a household employee $1,400 or more in 2004 must pay Social Security and Medicare taxes, just like every other employer. That's the so-called FICA withholding

FICA Maxiumum 2004 FICA Limits

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2004 FICA LIMITS

ANNUAL SOCIAL SECURITY WAGE BASE:
$87,900

SOCIAL SECURITY TAX RATE:
6.2%

MAXIMUM ANNUAL SOCIAL SECURITY TAX WITHHOLDING:
$5,449.80

ANNUAL MEDICARE WAGE BASE:
NO ANNUAL LIMIT

MEDICARE TAX RATE:
1.45%

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