[3][2] Federal unemployment insurance taxes must also be paid if the household pays any number of employees a total of $1,000 or more in a calendar quarter.
[4] State unemployment insurance taxes have the same requirement with the exceptions of California ($750),[5] New York ($500),[3] and Washington, D.C. ($500),[2] which have lower thresholds.
[6] Parents that hire babysitters for their children are also required to pay the nanny tax if compensation exceeds the annual wage threshold for any one sitter.
[7] Employers of household workers can offer benefits such as parking, public transportation, college tuition, and health insurance as non-taxable compensation.
[18] The nanny tax received considerable attention in 1993 during Nannygate, when Zoë Baird, Bill Clinton’s nominee for United States Attorney General, was forced to withdraw after revelations surfaced that she had employed illegal aliens as a nanny and a chauffeur and failed to pay employment taxes.
[19] In 2006, a Nannygate-like controversy developed in Sweden when it was revealed that several members of Prime Minister Fredrik Reinfeldt’s cabinet had employed domestic workers but neglected to pay the required taxes.