October 16, 2012
Tuesday Tax Tip for Household Employers
When hiring a domestic worker to work in your home (i.e. nanny, health aide, housekeeper, etc.), you can reduce the taxes for both you and your employee by taking advantage of the IRS-approved non-taxable forms of compensation. When a household employer pays for any of the following expenses for their employee, the payments are not considered taxable wages so neither the employer nor the employee has to pay any taxes on that portion of the compensation:
College Tuition & Books (up to $5,250 per year)
Parking (up to $240 per month)
Public Transportation (up to $125 per month)
Mobile Phone Service
If any of these expenses apply in your situation, call us and we can make sure you set up payroll correctly to minimize your "nanny tax" liability -- and the tax liability for your nanny.
July 17, 2012
If you pay a domestic worker (i.e. nanny, housekeeper, senior caregiver, etc.) $1,800 or more in a calendar year, you are required to withhold Social Security and Medicare taxes (currently 4.2% and 1.45%, respectively) from your employee's pay. Collectively, these taxes are known as "FICA." Employers who fail to withhold the FICA taxes are responsible for paying them for their employee.
For more information about the "nanny tax" withholding requirements, visit our Expert Advice page.
January 24, 2012
If you employed a domestic worker during 2011 and paid $1,700 or more, there are two important "nanny tax" deadlines that are quickly approaching:
Your state requires household employers to file employment tax returns by January 31. (Your state may also require you to file an Annual Reconciliation as part of the year-end process).
You are required to prepare Form W-2 and distribute it to each employee no later than January 31. (Important Note: Don't use Form 1099, which is for independent contractors. The IRS has ruled that domestic workers should be classified as employees and misclassifying your employee as an independent contractor can expose you to felony tax evasion charges and expensive penalties).
If you're a Breedlove client, we have all your obligations covered. If you're not a client and you want help meeting the state and federal deadlines, just complete our Secure Online Registration and we'll take care of everything.
December 8, 2011
Effective January 1, 2012, California families that employ a domestic worker (i.e. nanny, housekeeper, health aide, etc.) are required to provide each worker with a written wage notice at the time of hire. Known as the California Wage Theft Prevention Act, the law mandates that the notice includes 1) the rate of pay, including overtime rates if applicable, 2) pay frequency, 3) employer information, including their formal name, address and phone number and 4) the name, address, and phone number of the employer's workers' compensation insurance carrier.
If you're preparing an employment agreement, we suggest including this information in the agreement. If not, you can provide these details to your employee(s) in a separate document.
February 21, 2011
A reminder to families who employed a domestic worker in 2010 (i.e. nanny, housekeeper, personal assistant, health aid, elder care companion, etc.) and paid the worker more than $1,700, Form W-2 Copy A & Form W-3 must be filed with the Social Security Administration by February 28. (Note: If you are a Breedlove client, we’ve got you covered).