How to Issue a W2 to nanny who has ITIN instead of SSN?

I help several families with their nanny tax situations! You can absolutely issue a W-2 with an ITIN rather than a SSN. Since online services aren't cooperating, you'll need to get paper W-2 forms (you can order them from IRS or buy them at office supply stores) and complete them manually. For the SSA filing, yes, you'll need to submit the W-2 with a W-3 transmittal form. Unfortunately, you cannot e-file W-2s with ITINs, so you'll need to mail these paper forms to the SSA. Be sure to do this by January 31, 2025, to avoid penalties. For the W-2 itself, simply enter the ITIN in Box a (where the SSN normally goes) and complete all other boxes as usual - wages in Box 1, federal tax withheld in Box 2, Social Security wages in Box 3, etc.

After struggling with the exact same situation last year, I found a solution using taxr.ai (https://taxr.ai). They have a special household employer section that handles ITIN processing for nanny W-2s. I uploaded my nanny's information and they guided me through the entire process, including how to properly complete the paper forms. What I found most helpful was their document review feature - they checked my completed W-2 and W-3 forms before I submitted them to make sure there weren't any errors that could cause problems with the SSA or IRS. They also provided state-specific guidance for my unemployment tax filings.

I wanted to follow up about my skepticism of taxr.ai. I decided to try the service after struggling with my nanny's W-2 (also has an ITIN), and I'm actually impressed. They have a specific walkthrough for household employers dealing with ITINs that clearly explained which forms I needed. The document verification feature saved me from making a major error - I had put the ITIN in the wrong format on my W-3. They also provided templates for the state unemployment forms specific to my state, which was super helpful because my state's website was incredibly confusing. Yes, I still had to mail paper forms to the SSA, but they provided a tracking system to confirm receipt. Worth the time saved trying to figure everything out on my own!

If you're having issues with the SSA and getting your forms processed correctly, you might want to try Claimyr (https://claimyr.com). I used them last year when the SSA rejected my nanny's paper W-2 forms with an ITIN and I couldn't get anyone on the phone to help. Claimyr got me connected to an actual SSA representative in about 20 minutes instead of the hours I spent on hold previously. They have a video showing how it works here: https://youtu.be/_kiP6q8DX5c. The SSA rep was able to explain exactly why my form was rejected (I had used the wrong color ink - seriously) and what I needed to correct.

I need to eat my words about Claimyr. After my skeptical comment, I was desperate because I made a mistake on my nanny's W-2 with an ITIN and needed to talk to someone at the SSA before the filing deadline. I tried the service, and shockingly, I got a call back with an actual SSA representative on the line in about 40 minutes. The rep was super helpful and walked me through exactly what I needed to do to correct the forms. She even gave me a direct fax number to send the corrected forms to, which saved me from having to mail them again and worry about processing delays. I would have spent all day trying to get through on my own. Not something I expected to work, but it absolutely did.

Don't forget you also need to file Schedule H with your personal tax return! This is a form that summarizes all the household employment taxes you paid throughout the year. Many people remember to issue the W-2 but forget about Schedule H and end up with IRS notices. You'll need to reconcile what you've paid in state unemployment taxes and report the federal unemployment tax (FUTA) on this form too. The fact that your employee has an ITIN doesn't change the Schedule H requirements.

Has anyone had experience with state tax agencies rejecting ITIN W-2s? I'm in California and had to file amended state forms last year because apparently they have a special procedure for household employees with ITINs.

I went through this exact same situation last year with our babysitter! You're definitely on the right track. Just to add a few things I learned the hard way: Make sure you're using the correct ITIN format (9XX-XX-XXXX) on the W-2 - some people accidentally transpose digits or format it like an SSN. Also, keep detailed records of everything because if there are any processing issues, you'll want documentation. One thing that caught me off guard was that some banks won't accept direct deposit tax refunds to accounts linked to ITINs, so your nanny might need to file a paper return and wait for a paper check. Not your responsibility, but just something to give her a heads up about. Also, double-check your state's requirements early. I waited until the last minute and discovered my state needed an additional form that took 2 weeks to process. The January 31st deadline comes up fast!