All posts tagged Au pairs

  • A Complete Tax Guide for Au Pairs in the U.S.

    Au Pair Taxes Explained by Sprintax

    According to the IRS (Internal Revenue Service) there are up to 12,000 au pairs in the US at any stage during the year.

    An au pair is an individual between the ages of 18-30, who travels from their home country to live in the US with a family and work as a caregiver. Working as an au pair is an unrivalled opportunity to experience the American way of life – and for those who are not native English speaker, it’s a chance to learn and practice the language.

    One of the many challenges that an au pair may face when they arrive in the US is coming to terms with the US tax system.

    With that in mind, we’ve put this handy guide together to fill you in on everything you need to know about foreign au pairs and tax in the US.

    So let’s get started!

    Do Au Pairs have to file a US tax return?

    In short, yes.

    All payments that you have received as an au pair from your host family, which cover the cost of any required academic coursework, room and board, or compensation for childcare work are subject to income tax.

    As a nonresident, au pairs will owe tax on all of the money they earned from US sources.

    You will need to apply for a Social Security Number (SSN) or for an Individual Taxpayer Identification Number (ITIN), whichever is applicable in your case, in order to file your taxes.

    In the United States, besides federal tax, there are also state taxes and local taxes. Whether you need to file a state tax return will depend on the tax rules of the state in which you lived and /or worked, as some states do not require you to pay state tax.

    In order to reduce your tax liability during filing, the IRS permit au pairs to pay tax in quarterly instalments. To do this, all you’ll need to do is submit Form 1040NR-ES (estimated tax return) to the IRS on a quarterly basis and enclose a cheque for the amount you are paying. You may also pay your tax in full in the end of the tax year with your 1040NR-EZ.

    What taxes are Au Pairs exempt from?

    Because au pairs are paid for their work in the setting of a private home, they are not subject to mandatory US income tax withholding and reporting on Form 941 and W-2.

    Most au pairs are considered nonresident aliens for tax purposes, so they are not eligible for the Earned Income Tax Credit, the Hope Credit or the Lifetime Learning Credit.

    Wages will also be exempt from social security and Medicare taxes because of the au pair’s status as a nonresident alien. However, if you had previously been in the United States as a student, teacher, trainee, or researcher in F, J, M, or Q non-immigrant status, then you may be classed as a resident alien, meaning you may be subjected to these taxes.

    What happens if I don’t file?

    It’s important to note that, by not filing your tax return, you can severely jeopardize your chances of securing a US visa or Green Card in the future.

    If the case arises where you end up owing additional taxes along with your return, you have various options to pay. The most common forms of paying are pay by check, bank transfer or your credit or debit card.

    You may need to prepare a payment voucher and mail it to the IRS with a check or money order if you choose this payment method.

    If you choose to pay with a payment voucher, Sprintax will provide the filled out form for you. You will find detailed information about the method you have chosen in your instructions.

    Check out this guide on what to do if you missed the tax deadline.

    How to file my US tax return

    Usually, you have until 15 April of every year to file your tax return, however – with the ongoing COVID19 pandemic causing chaos across the globe, the deadline for 2020 has been moved forward to 15 July.

    At Sprintax, our software has the capabilities to help you to prepare your federal tax return easily online. We will also assist you with your state tax return.

    By preparing your tax documents with Sprintax, you can also ensure that you receive your maximum tax refund! And with the average Sprintax user receiving a tax refund of $1,153, it’s easy to see why it’s worth your time checking to see what you are owed!

    With Sprintax you can:

    • Save time and stress!
    • Determine your residency status
    • Prepare a fully compliant US tax return
    • Maximize your State tax refund if available
    • Avail of our 24/7 Vita Qualified Live Chat facility

    Prepare your US tax return today!