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Payroll tax compliance for your new household employee does not need to be terrifying, time consuming or expensive. HomeWork Solutions is a nationally recognized “nanny tax” service company, providing household employers nationwide with trusted and time-saving payroll and payroll tax solutions.

What you need to know about the “Nanny Taxes”

February 22, 2016


Courtesy of Kathy Webb, HomeWork Solutions, Inc.

CLASSIFICATION IS THE KEY

You become a household employer when you hire an individual to perform duties and provide services under your direction in your private home. Generally, these workers are your employees, not independent contractors. Failure to properly classify the worker and make the appropriate employment tax filings and payments is considered tax fraud by the IRS. HomeWork Solutions is here to help.

PAYROLL TAX RESPONSIBILITIES

You are responsible for employment taxes when you pay a household worker who is 18 years or older $2000 or more in the calendar year 2016.

Social Security and Medicare Taxes

The household employer is responsible for the payment of all Social Security and Medicare taxes to the IRS. You may choose to either collect your employee’s taxes via payroll deductions or fund these taxes yourself.

Unemployment Taxes

You will make contributions to the IRS and your state to fund unemployment and worker re-training programs.

Income taxes

Federal and state income taxes are ultimately the responsibility of the household employee; however, it is a best practice to deduct these taxes from your full time employee’s wages to help them avoid owing large sums when they file their annual income tax returns.

Tax Filings

You have both Federal and State tax filing responsibilities. Federal employment taxes are reconciled with the household employer’s annual Federal Income tax return. Your state will require quarterly unemployment tax filings, as well as reports and remittance of state income taxes withheld, if applicable. Employee wages are reported to the Social Security Administration. Your employee is due a W-2 form in January.

Labor Law

The Fair Labor Standards Act (FLSA) establishes that household workers such as a nanny, housekeeper or senior caregiver are hourly wage employees, and extends minimum wage and overtime pay protections to them. While most benefits such as health insurance contributions and paid time off are negotiable, your state or locality may impose minimum requirements that you must comply with. State specific household payroll and labor law requirements can be found here.

Help is Available!

Household Staffing has arranged with household payroll provider HomeWork Solutions (HWS) two special benefits.

First, they will offer you a free consultation to discuss your specific situation and responsibilities. You may schedule a consultation or pick up the phone and call 800.626.4829. Make sure they know Household Staffing referred you!

Secondly, by mentioning Household Staffing when you enroll for service, HWS will waive the $100 account set-up fee! They will obtain your tax identification numbers, perform your new hire reporting to the government, and get your payroll all set up for you, compliments of Household Staffing.

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