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I'm not exactly sure how this works, but hopefully someone can help!

10-99 is not legal, according to IRS. Nanny must be an employee (receive a W2) to be considered "legal", if she works for more than 30 hours a week (please double check on that). I called IRS to confirm that back in the days lol

My husband does all the nanny tax and apparently it is a pain but he did it using an excel spreadsheet. you have to obtain an EIN. Sorry I am not quite sure what he did so I am of no help....

Apparently you could hire accountants to do your payroll taxes at a manageable fee.

Looking back, if I had a choice, I probably would rather do it under the table.... there are so much more options in terms of nanny selection (many prefers to be under the table, or pay their own taxes as a contractor for some reason), and I would have much more freedom to terminate the relationship if I needed to. Back then I felt so tied to the nanny tax system (because it was quite complicated to set one up), I just can't really terminate the relationship with our nanny because I didn't want to go through the pain of setting up another system for another nanny again.... but that's just me. Husband prefers doing it legally.

I was unable to do the "under the table" route as a nanny, because my husband works in tax software and would automatically lose his job if caught in any way fudging the taxes. I had one employer who did all the research and set everything up himself, and another who went with an accountant. From what they said, the accountant was well worth the cost (which wasn't high).

Getting an EIN is easy. You just call the IRS and they hook you up! I think it took 2 minutes. You're responsible for the employer share of FICA (payroll taxes). You can pay the nanny's share too and gross up her income (we did this--it meant more $ for her). You give your nanny a W-2 by the end of Jan. You usually don't have to withhold on household employees.

Don't forget about state taxes.