January 7, 2013
As usual, there are some tax law changes for 2013 that household employers need to be aware of. Here they are:
- The "payroll tax holiday" has expired. The social security tax has reverted to its traditional 6.2% (it was temporarily reduced during 2011 and 2012 in an attempt to stimulate consumer spending). The change will decrease take-home pay slightly for all U.S. workers.
- The FICA reporting threshold did not change. The $1,800 threshold has been extended through 2013. Families who pay a worker less than that amount in the calendar year are absolved of the FICA (Social Security and Medicare) reporting responsibilities under the "casual babysitting exemption."
- The federal mileage reimbursement rate has increased. The rate for mileage reimbursement increased by one penny per mile. It's now 56.5 cents for each mile an employee drives on the job.
Have a safe and happy new year!
November 3, 2011
In 2011, if a family employs a household worker and pays him/her less than $1,700 in the calendar year, the family is not obligated to withhold FICA taxes (Social Security and Medicare) nor are they required to pay the employer portion of FICA for that individual. It's generally referred to as the "Casual Babysitting Exemption."
In 2012, the threshold will increase to $1,800 in a calendar year.
Please keep in mind that, even though you may be exempt from FICA reporting, you may still be required to file unemployment tax returns if the total paid to all employees combined exceeds $1,000 in a calendar quarter (a few states have thresholds that are even lower).
Finally, whether you have to file or not, you are legally still an employer so make sure you adhere to all local, state and federal labor laws.