Do you have a summer nanny working for you this season or an after-school nanny starting in the fall? Many of TLC’s clients hire a TLC caregiver to be their full-time nanny during the summer or a part-time, after-school nanny to help out during the school year. Having a nanny makes life a lot easier, but we often get phone calls asking questions about paying your nanny taxes.
Talking about taxes can often seem overwhelming. Luckily, TLC can refer you to professionals that can help. We recommend using Breedlove and Associates for all your household employment needs.
By definition, a nanny working in the home of a family is an employee of the family (even if the job is temporary, permanent, part-time, or full-time). The nanny is NOT an independent contractor. The ‘employee’ classification is determined by the nature of the work performed—not by how much the nanny is paid or the amount of time she is with the family. The IRS has ruled definitively that caregivers are employees of the families for whom they work.
If you are only employing a nanny for a few months in the summer or for very part-time hours during the school year, you may not think you need to withhold taxes from your nanny’s wages, but you are most, likely mistaken.
If you pay your nanny more than $1,900 (2014) in a calendar year, you, as an employer, must meet the household employment tax withholding and reporting obligations. You are required to withhold payroll taxes from your nanny’s wages and then report and pay those taxes to the tax agencies quarterly. Before your nanny starts, have her fill out a w-4. This form helps determines how much will be withheld from your nanny’s paycheck. At the end of the year, your nanny should be sent a Form W-2 detailing her wages, as well as the taxes that she has pre-paid throughout the year.
Filing the necessary papers and to pay your nanny legally may seem like a hassle, but it is illegal for you—the employer—to fail to withhold taxes and file employment tax returns. Our friends at Breedlove and Associates, will take the stress out of paying your nanny legally and will educate you and help you take advantage of the tax breaks you may enjoy by doing so. Visit their website to learn how.
We hope you find this helpful. Please call TLC for Kids St. Louis 314-725-5660 or TLC for Kids Miami 305-256-5905 for your child care needs.
Thank you to our friends at Breedlove and Associates for sharing this informative piece on the new laws going into effect October 1st. TLC for Kids recommends that both nannies and families read about new healthcare rules for employers and employees.
Beginning October 1, the first stages of the Affordable Care Act will go live. Americans looking for health insurance will have access to an online health insurance exchange where they can compare policies and ultimately purchase a plan that suits their individual needs. Because this is a new change to the way health insurance is administered, many families are confused or concerned about how the changes will impact them as a household employer.
To help these families feel more comfortable moving forward, we’ve created the following Frequently Asked Questions for household employers:
What is the Affordable Care Act?
The Patient Protection and Affordable Care Act, commonly referred to as the Affordable Care Act, is a federal statute which was signed into law in 2010. The statute is primarily aimed at reducing the overall cost of health care and decreasing the number of uninsured individuals living in the United States by enacting a number of different mandates, subsidies and tax credits.
Am I required to offer health insurance to my employee(s)?
No, employers are not required to offer health insurance if they employ fewer than 50 employees. However, you are required to provide your current employee(s) and, at the time of hire, any future employee(s) with notice of the new Health Insurance Marketplace.
Is my employee required to have health insurance?
Yes, beginning in 2014, your employee may be charged penalties if she does not have health insurance coverage. However, you are not responsible for making sure your employee has health insurance.
What is the Health Insurance Marketplace?
The Health Insurance Marketplace, or The Marketplace, is a “one-stop shop” where individuals can compare and purchase health insurance policies. Open enrollment for The Marketplace begins on October 1, 2013 for coverage beginning January 1, 2014. Your employee(s) will be able to purchase health insurance through The Marketplace until open enrollment ends on March 31, 2014. For more information on The Marketplace, or to complete an online application for health insurance coverage, please visit www.HealthCare.gov.
How much will health insurance cost?
The cost of health insurance will vary depending on your state and the amount of coverage your employee chooses. After completing an application through The Marketplace, your employee will be able to compare prices and coverage options for different health insurance policies. Depending on your employee’s income and family size, she may be eligible for the Advance Premium Tax Credit if she purchases insurance through The Marketplace. The credit can be applied directly to her monthly premiums which results in immediate cost savings. If she qualifies for the Advance Premium Tax Credit, her savings will be reflected in the prices displayed on The Marketplace.
If I contribute to my employee’s health insurance policy, will I be eligible for any tax breaks?
If you set up a health insurance policy for your employee through SHOP (Small Business Health Options Program) on the Marketplace and pay at least 50% of your employee’s premiums, you may be able to take advantage of the Credit for Small Employer Health Insurance. To take this credit, you’ll attach Form 8941 to your personal income tax return. Beginning in 2014, the credit will increase to up to 50% of the contribution you pay. For more information regarding the requirements for contributing to health insurance, please contact our office.
TLC For Kids has opened a new location in Miami. TLC For Kids, Inc., St. Louis’ premiere childcare agency, has been helping families with babysitters and nannies for twenty-eight years. Now, owner Sharon Graff-Radell and her husband Gregg Radell, Pinecrest residents, have brought TLC to Miami.
TLC For Kids Miami helps families who are looking for in-home childcare. For the first time, Miami residents will have access to a screened pool of temporary nannies available for emergency and back-up care in addition to their scheduled nanny and babysitting needs.
TLC innovated the childcare services industry with its Temporary Nanny and Babysitter services. Along with assisting families with hiring a full-time or part-time nanny, TLC helps parents in a pinch when there is a last-minute need in the home because a child is sick or a scheduled sitter falls through. When clients need help on short notice so that they can attend an unexpected doctor’s appointment or a meeting, they can rely on TLC to come through with a great caregiver. All of TLC’s sitters are vetted by agency professionals, have verified references, background checks, and CPR training.
TLC’s founder Sharon Graff-Radell has been involved in the nanny industry since 1985 and has helped agencies in markets across the county to better understand and service their clientele. She has also been on the board of the International Nanny Association and has earned numerous awards for her service. Gregg Radell, a Miami native, has been a successful small business owner for many years, working in varied areas of the electronics industry.
TLC For Kids Miami can be reached at 305-256-5905 weekdays from 9:00 am – 6:30pm and has locations in Pinecrest and Miami Beach. To learn more about TLC and hiring a nanny or babysitter visit the website tlcforkids.com/Miami