Keeping up with Minnesota nanny taxes isn’t too difficult, but it does require some work. To give you all the resources you need, we’ve compiled everything you need to know to stay compliant with federal, state and local household employment laws. Check out the information below that HomePay is here to help with.*
Checklist for Minnesota household employers
We know you’re busy so here’s a quick “to-do” list with links to extra details below.
Beginning of employment
- Verify caregiver’s work eligibility.
- Set up EIN & state tax account(s).
- Obtain a required workers’ compensation insurance policy.
- Provide a state or city wage notice.
- Display employment posters.
During employment
- File returns, remit taxes and manage correspondence.
- Pay at least Minnesota minimum wage.
- Pay overtime, when it applies.
- Provide a pay stub.
- Provide sick and safe time.
Optional benefits for your employee
Ending employment
- Manage unused paid time off.
- Close down your state employment tax account(s).
- Maintain payroll records.
Beginning of employment
Verify caregiver’s work eligibility
Before your employee begins to work, you need to fill out Form I-9 to verify they’re eligible to work in the U.S. The I-9 does not get sent to any government agency but must be presented to authorities if your nanny or senior caregiver’s employment eligibility is ever questioned.
Set up EIN & state tax account(s)
You must first apply for a EIN (Employee Identification Number) with the IRS. This will be used as your unique ID with both state and federal tax authorities. Then you can open an account with your state taxing authority.
Workers’ compensation
Household employers in Minnesota are required to carry a workers’ compensation insurance policy if their employee earns $1,000 or more during a calendar quarter. These policies pay for medical expenses and lost wages if an employee has a work-related injury or illness. Obtain an instant quote and purchase a policy online, or contact our partner, Clarke White, at 804-267-1210 or wcnanny@allrisks.com.
Wage notice
Minnesota household employers are required to provide their employees with a written wage notice at the time of hire and keep a copy once it is signed by their employee. Any changes made to the wage notice must be provided to the employee in writing prior to the changes taking effect. Employees may request to view work records every 6 months.
Families in Minneapolis are required to provide a different wage notice to their employees.
Employment posters
Household employers in Minnesota are required to notify their employee of their rights by sharing these posters.
During employment
File returns, remit taxes and manage correspondence
- File state employment tax returns throughout the year and remit state employer and employee taxes.
- Remit federal employer and employee taxes via 1040-ES estimated tax payment voucher four times each year.
- Each year end, prepare Schedule H and file with Form 1040; prepare and distribute Form W-2 to each employee; file Form W-2 Copy A/Form W-3 with the Social Security Administration (SSA).
- Manage ongoing alerts and notices from the state (tax rates and labor law is subject to change at any time).
Minimum wage rates
- Minnesota state: $11.13/hour.
- Minneapolis city: $15.97/hour.
- St. Paul city: $12.25/hour.
Note: Whenever more than one rate applies, employers are required to pay the higher rate.
Minnesota overtime requirements
- Live-out employees must be paid 1.5x their hourly rate for all hours worked over 40 in a workweek.
- Live-in employees are required to be paid overtime for all over worked over 48 in a workweek.
- Overtime is not required to be paid when work is performed on a holiday.
Pay stub requirement
Household employers in Minnesota are required to provide their employees with a pay stub each pay period. Employers must keep records of each pay stub and make them available to their employees within 72 hours of being requested.
Sick and safe time
Household employers in Minnesota are required to provide employees who work at least 80 hours/year to accrue at least one hour of sick and safe time for every 30 hours worked to a max of 48 hours earned.
Optional benefits for your employee
Health insurance
Families with only 1 employee can make contributions toward their employee’s health insurance premiums and treat the amount as non-taxable compensation. In this scenario, neither the employee nor the employer are required to pay any taxes on that portion of the compensation.
Families with 2 or more employees have 3 options:
- Set up an Individual Coverage Health Reimbursement Arrangement (ICHRA).
- Set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
- Purchase a policy through SHOP (Small Business Health Options Program).
Visit our health insurance page for more information about these options.
Mileage reimbursements
The current federal mileage reimbursement rate is 70 cents per mile and only covers miles driven by your employee while on the job. Miles driven commuting are not eligible for reimbursement.
Ending employment
Managing unused PTO
Minnesota household employers do not need to pay their employees for unused sick and/or vacation time.
Close down your state employment tax account(s)
The state tax agencies expect you to file timely returns for as long as your tax accounts are open — even to report $0 in wages paid.
Maintain payroll records
Household employers are required to keep wage records on file for at least three years.
* HomePay can assist with a wide range of the above-listed household tax and payroll needs; however, some state-specific requirements may not be fully supported. Ask a HomePay representative for more information.
The information contained in this article is general in nature, may not be applicable to your specific circumstances, and is not intended to be a substitute for or relied upon as personalized tax or legal advice.
