Finding an affordable nanny or baby sitter can be a real struggle for working parents. If you're fortunate enough to find a good nanny, you're likely to use his or her services on a regular basis. However, if you pay a baby sitter or a nanny often, you may actually be subject to a household employee tax or the "nanny tax".

How can you tell when you're subject to the nanny tax? What's included in the nanny tax? Here's a primer on how the nanny tax is used.

What Does the Nanny Tax Include?

Payroll taxes include Social Security taxes, Medicare taxes, and FUTA taxes. Social Security and Medicare taxes, also called FICA taxes, are equal to 15.3 percent of the employee's wages. This percentage is split evenly between the employer and the employee, so you should deduct 7.65 percent from the nanny's check and set aside another 7.65 percent for your contribution. You'll be required to send the total amount to the IRS four times a year as quarterly payroll taxes.

The Federal Unemployment Tax Act (FUTA) requires employers to make a contribution to the federal unemployment fund in case an employee makes a claim for unemployment benefits. FUTA taxes are also due as part of payroll taxes. In some states, a separate tax imposed by the state unemployment tax fund (SUTA) may also be due.

Are You Subject to the Nanny Tax?

The IRS states that baby sitters, nannies and any other household workers are employees because they are required to follow specific guidelines in the course of their employment. According to IRS guidelines, you'll have to pay federal payroll taxes on the wages of any household worker who earns $1,900 or more during the year. So if you pay your nanny a total of $1,900 in a calendar year, you are obligated to remit payroll taxes on that person's wages.

Exceptions to the Nanny Tax

There are a few exceptions to the Nanny Tax rule: You don't have to pay Social Security and Medicare taxes on the wages of nannies who are your spouses, your minor children, or nannies who are under the age of 18. In addition, you are not required to pay FUTA taxes when the nanny is your spouse, your minor child or your parent.

If you use the services of a nanny or a baby sitter, you may be subject to the "Nanny Tax." Make sure that you keep up with the IRS guidelines so that you can remit quarterly payroll taxes to the agency on time.