February 20, 2015
Household employers have a few very unique tax rules to follow. The best example of this is having to attach a Schedule H to your personal income tax return. This form is strictly for reconciling household employment taxes, so only those who have hired a nanny, senior caregiver, housekeeper or other domestic employee have to remember to fill it out during tax season. But it wasn’t always this way.
In October of 1994, President Bill Clinton signed the Social Security Domestic Employment Reform Act into law. This bill set the parameters for how “nanny taxes” are handled today on the federal level – including the requirement for these taxes to be reconciled on your personal income tax return. That means this tax filing season marks 20 years of families having a much easier method of reporting the wages they pay to their household employee and letting the IRS know what federal taxes they paid throughout the year.
Note: Your state has its own requirements for handling household employment taxes. Make sure you understand how unemployment insurance taxes and income taxes should be remitted throughout the year. Our state-specific nanny tax pages are a good place to start.
So as you’re gathering your tax-related documents and hoping for the best from Uncle Sam, don’t forget about the Schedule H. And whether you file your income tax return online or not, make sure the amount of household employment taxes on your Schedule H shows up on Line 60a of your 1040.
December 21, 2012
We got a call from a prospective client yesterday that warmed all of our hearts. He came to us after hearing good reviews of our service from several friends. He liked everything he heard during our free phone consultation so he decided to join the service. We're thrilled to serve him. But that's not the best part.
Before he hung up, he said he was "giving the gift of Breedlove" to his wife...she has been handling all of their "nanny tax" obligations (payroll, quarterly state employment tax returns, Form W-2, Schedule H, federal 1040-ES payments, etc.) for several years and he wants to surprise her with our service as a Christmas present. He doesn't want her to have any more paperwork, government correspondence or deadlines to worry about.
Note: The IRS estimates the average household employer should budget 50-55 hours per year on payroll & tax compliance...he's excited to give her a lot more precious free time.
We're all so flattered to be considered present-worthy! It made our day...heck, our whole week. So, we made a special hand-made card that he can put under the tree. Can't wait to hear how she likes it!
Happy holidays from all of us at Breedlove!
December 12, 2012
Every December, we get a lot of calls from families who are trying to "clean up" their 2012 tax issues -- and getting their nanny "on the books" is very high on the list of to-do's. Most families with a household employee know they have some obligations, but they don't really know what to do or when. It's very common for busy families to decide to "worry about it later."
However, that procrastination can leave the family and the nanny with more worries. Most states require employers to file employment tax returns in each quarter in which there were wages paid (some even require monthly deposits). If they're not filed on time, the state will assess late penalties and interest charges. Additionally, when taxes aren't handled correctly, the nanny misses out on the important benefits that other professionals get, such as unemployment, social security, medicare and disability.
The good news is, it's not too late. We can get families caught up in time to take care of Form W-2, Schedule H and the other year-end obligations. As part of our setup process, we also petition the tax agencies to waive late penalties and we've had very good success getting them waived on behalf of our clients.
While waiting until the end of the year is not ideal (the "nanny tax" compliance tasks start at time of hire), it's easier and cheaper to take of the obligations now than it will be down the road.
January 12, 2012
We've had a lot of calls in the last two weeks about nanny tax obligations. Some families are hiring a household employee for 2012, while others are trying to get a Form W-2 and Schedule H prepared for wages paid in 2011. If you want to learn more about the nanny tax obligations and how our household payroll service works, this nanny tax video will answer most of your questions in 3 minutes. Or, feel free to give us a call at 1-888-273-3356.
March 28, 2011
Reminder: It's less than 3 weeks until the tax deadline. For household employers, you'll include Schedule H with your federal income tax return. Federal taxes that you withheld from your employee (social security, medicare, federal income tax) along with federal employer taxes (social security, medicare, unemployment) will be accounted for on Schedule H. If you made 1040-ES payments during the year, those payments will offset the liability shown on your Schedule H. Any balance due or refund will be included with the rest of your personal tax situation.