Posts Tagged ‘Nanny Tax’
Help! I’m a Nanny and Didn’t Get a W-2
At this time of the year we often hear from nannies with questions about taxes. If you are a nanny and haven’t received a W-2 from your employer, here are a few things you can do:
1. Ask the family if they’ve prepared your W-2 and when you can expect it. It’s entirely possible that the family got busy and completely forgot to prepare your W-2, or they didn’t realize the deadline was January 31. Also, if you recently moved and didn’t update the family with your new address, they could have mailed it to the wrong place.
2. If you discover the family isn’t going to provide a Form W-2 because they didn’t withhold or pay taxes last year, remind them that failing to handle the “nanny tax” obligations is extremely risky (felony tax evasion with expensive penalties) and denies you several important benefits. They may think that nanny taxes will be very expensive, so it’s worth letting them know that tax breaks for childcare expenses can offset most – if not all – of their employer tax costs.
3. Don’t accept a Form 1099 from the family in place of a W-2. This form is for independent contractors only. This is important to you financially because independent contractors have to pay the entire FICA tax liability (15.3%) whereas employees only have to pay half (7.65%). For a caregiver making $30,000 per year, that’s a difference of $2,295! It not only hurts your pocketbook, it’s also risky for the family. The IRS has ruled definitively that nannies should be classified as employees and families that misclassify their employee as an independent contractor are subject to tax evasion charges.
4. If the family simply refuses to give you a W-2 prior to the April 18 tax reporting deadline, you’ll be forced to file Form 4852, which is the substitute for Form W-2. Filing this form can trigger an audit for the family, but as a last resort, it’s the only way to legally report your income to the IRS. The form and instructions for filing it are available here.
Thank you Regardingnannies.com and Stephanie Breedlove for sharing this helpful information.
Best Practices to Establish the Perfect Nanny Relationship
Our guest post today comes from International Nanny Association.
You’ve finished your search and have finally hired the best-fit nanny for your family, but where do you go from here to ensure that you develop the best possible nanny relationship ongoing?
Honeymoon Period
In every new job, both the employer and employee will be trying to make the best possible impression. Venturing into new territory will mean that the nanny may try different approaches and end up keeping some, while changing others. Adjusting to the expectations of the job and forming a bond with the children and family will take time. Rome, the perfect romance, and a long-lasting nanny relationship aren’t built overnight (or in two weeks); be patient and realistic.
Don’t Sweat the Small Stuff
You hired this professional for a reason. That being said, she’s human. She may do things differently than you do, or would do. That doesn’t make them wrong. People have diverse ways of handling children. It’s easy to pick up on these variances, especially in the beginning, but try to be respectful and give your new nanny the space she needs to blossom in your household. Carefully weigh what really matters. Certainly, something involving a safety concern or a personal boundary you’d communicate about, but if she gets your child dressed in another order than you do or has a varied teeth brushing routine, it may not be worth worrying about. In fact, many parents comment on how much they’ve gained from having another adult around, with years of childcare experience, who second handedly taught them a great deal, if they were open-minded and willing to see other methods through this lens. At the end of the day, if your children are well cared for and you trust her, then that speaks volumes.
Read more for a successful nanny / family relationship.
The professionals at TLC Family Care personally assist nannies, babysitters and families in St. Louis, Atlanta, Chicago, Nashville, Memphis, Charlotte, Miami and Orlando to find the right childcare arrangement. Our mission is to provide a safe and personalized approach for families and caregivers to connect with each other that is not an internet search. TLC has worked with families, nannies, sitters, newborn care providers, and tutors for over 35 years and looks forward to working with you! To find great nanny and babysitting jobs visit us at tlc@tlcforkids.com or Call 314-725-5660.
What Happens If I Don’t Pay Nanny Taxes?
“Not paying your nanny taxes may seem like an easy way to save some money and not have to deal with the hassles of calculating and remitting taxes. Plus, if you don’t pay nanny taxes, how is 
anyone going to find out? Your nanny is on board as she gets a few extra dollars in her paycheck. You’re not running for political office or being nominated for a position in government. And those are only the people who get caught not paying nanny taxes, right?
Wrong.
There are a number of ways to easily get caught if you don’t pay nanny taxes. Most will end up with you paying much more in fines and penalties than in the actual tax responsibility you chose to ignore.”
Our friends at GTM Payroll Services have laid it all our for you, and what can happen if you avoid Nanny Taxes.
Federal Reporting Thresholds for Household Employers
Tax information for employers and nannies is being updated for the new year. Thanks to our friends at HomePay for this valuable information all nannies and employers should know. 
The earnings threshold that triggers the requirement to remit FICA taxes on a household employee’s wages will increase from $2,400 in 2022 to $2,600 in 2023. If the annual FICA wage threshold is reached, the employer becomes responsible for remitting both the employee and employer portions of FICA on all the wages they paid to the employee during the tax year. When wages paid to a household employee do not reach the annual FICA threshold, the employer is not required to issue a W-2.
A new line has been added to form 1040 (federal personal income tax return) for reporting income earned as a household employee that was not reported on form W-2 because the wages stayed below the FICA threshold. It is no coincidence that the IRS added this new line alongside the change to the threshold triggering the requirement for TPSOs like Venmo and PayPal to file and issue a 1099-K.*
*Previously, the 1099-K threshold had been $20,000 and 200+ transactions received. Effective 1/1/23, the threshold will be $600 in payments received.
1099-K Threshold Changes Postponed
This past Friday, December 23rd, the IRS announced that the effective date of the new 1099-K threshold will be pushed back a year. So, rather than impacting payments made after 1/1/22, the change will impact payments made after 1/1/23. Per the IRS announcement, the delay is intended to provide more time for taxpayers to prepare and understand the new reporting requirements.
While changes to the 1099-K requirements do not impact payments made through a payroll service, we know that TPSOs like Venmo, PayPal and Stripe are frequently used by families to pay date night sitters and other more temporary/adhoc providers. Earlier this year, we shared answers to FAQs we received when the change was first announced. As of now, the answers are still accurate – minus the effective date of the change. We will continue to compile resources to help families and domestic workers ensure that they have their ducks in a row for the 2023 tax filing season.
Should you have any questions, give us a call or reach out to HomePay for all your nanny tax and payroll needs.
The professionals at TLC Family Care personally assist nannies, babysitters and families in St. Louis, Atlanta, Chicago, Nashville, Memphis, Charlotte, Miami and Orlando to find the right childcare arrangement. Our mission is to provide a safe and personalized approach for families and caregivers to connect with each other that is not an internet search. TLC has worked with families, nannies, sitters, newborn care providers, and tutors for over 35 years and looks forward to working with you! To find great nanny and babysitting jobs visit us at tlc@tlcforkids.com or Call 314-725-5660.
Nannying & The Work-at-Home Parent Part 2
Now that there have been boundaries and ground rules established, the nanny and the work at home parent will need to talk about how to handle conflict/discipline as well as work on a schedule/routine that can be followed on a daily basis.
How to handle conflict:
When looking to hire a nanny, having a discussion about discipline philosophies and methods is necessary. Common areas of conflict are often discussed during the interview process, but if it’s not, this could cause issues between the nanny and work at home parent. Having regular, ongoing communication will help both parties discuss their ideas and preferences, but there will need to be a clear understanding of what the parent’s wishes ultimately are. A great way to keep the communication line open is by having an open dialogue type of meeting every month or every other week. This could be a safe place to discuss how things are going, what expectations parents have for in-home policies or specific rules in the house that may be changing, and it will also give the nanny the space to ask questions or share any difficulties/successes she has had in recent days with the children.
Read on to find additional tips on routine, work environment and avoiding micromanaging.
HomeWork Solutions is one of the nations leading nanny tax and payroll companies.
TLC For Kids, Inc. has been St. Louis’ premier nanny and babysitting agency for over 30 years. TLC For Kids’ dedicated staff is ready to assist you in finding nannies, tutors, newborn care specialists, sitters and more. Reach us at tlc@tlcforkids.com or 314-725-5660
Nannying & The Work-at-Home Parent
Many companies are now allowing their employees to work remotely, which means they can work from home rather than heading into the office for a traditional work day. Telework for a parent 
has many benefits, but it can also prove challenging if you’re looking for nanny services. Finding a nanny that can navigate the ins and outs of working in a home with a work at home parent requires communication and because of the unique set up, sometimes a different set of rules.
Setting boundaries is key.
Many nannies that have had negative experiences while working with parents at home often indicate that there was an issue with lack of boundaries. For example, will they be walking around the home throughout the day or will they be inside of an office for most of the time? Proximity to the parent is something that will need to be discussed right away. Talk about the specifics and agree to boundaries and ground rules up front. This will be unique to each family and the parent’s jobs. Here are helpful tips on establishing boundaries as a nanny with a work at home parent.
What are the three key boundaries to set when working with a work-at-home parents? Find out in part one of this two-part feature.
HomeWork Solutions is one of the nations leading nanny tax and payroll companies.
TLC For Kids, Inc. has been St. Louis’ premier nanny and babysitting agency for over 30 years. TLC For Kids’ dedicated staff is ready to assist you in finding nannies, tutors, newborn care specialists, sitters and more. Reach us at tlc@tlcforkids.com or 314-725-5660
Why didn't I get a W-2?
When tax time comes around every year TLC for Kids is often asked this question…Why didn’t I get a W-2? Babysitters often times do not receive W-2’s from the families they babysit for.
Nanny tax experts Breedlove and Associates share the reason why.
Nannies who work for one or more families on a temporary basis usually have lots of tax and legal questions. There are special provisions in the law for “casual babysitting,” so here’s what you need to know:
Temporary nannies are still employees; not independent contractors. They are employees of the family.
A nanny working in a family’s home — whether the job is temporary or permanent, part-time or full-time — is an employee of the family. It is illegal for the family to treat you as an independent contractor (a designation which increases your tax burden significantly). The “employee” classification is not determined by how much you are paid or the amount of time you work for the family; it is determined by the nature of the work performed. The IRS has ruled definitively that caregivers are employees of the families for whom they work.
Your employer may not need to withhold taxes from your wages.
Household employment tax requirements are determined by the amount of the gross wages paid to an employee. In 1995, the IRS modified household employment tax requirements to exempt temporary employment and casual babysitting from the tax process. This is sometimes referred to as the “Casual Babysitting Exemption.” As a temporary employee, if you earn less than $1,900 (2014) in a calendar year, your employer is not required to withhold any taxes from your salary.
However, if you earn more than $1,800 (2013) from a family in a calendar year, your employer — the family — must meet the household employment tax withholding and reporting obligations. They are required to withhold payroll taxes from your wages and then report and pay those taxes to the tax agencies quarterly — along with some employer taxes that provide you with retirement and unemployment benefits. At the end of the year, the family should give you a Form W-2 detailing your wages as well as the taxes that you have pre-paid throughout the year.
If your employer fails to withhold taxes and file employment tax returns, they are breaking the law — and you will not be entitled to the retirement and unemployment benefits mentioned previously. Hopefully, you won’t face that situation. But if you do, the best thing you can do is make sure you avoid tax and legal problems for yourself by reporting your wages and paying your income taxes at the end of the year.
You are responsible for keeping track of your wages.
If you are paid less than the $1,900 (2014) threshold per family you work for, you will most likely not have any taxes withheld from your pay since your employers are not obligated to do so. However, temporary nannies are still required to track the amount of money earned from every employer — no matter how little you are paid. You are responsible for reporting all wages earned during the year by filing annual income tax returns — even if your wages are not high enough to trigger a tax payment.
Summer Nanny Taxes
Special ‘Thank You’ to Stephanie Breedlove from Breedlove and Associates for this guest blog post!
The anxiety first hits around late-April: School is coming to an end! How ironic that summer vacation actually makes life more hectic until you get everything straightened out. My kids are grown now but I remember the panic: School was going to let out, my husband and I were working, and we needed someone to care for the kids, even if it meant shuffling and chauffeuring them from camp to playdate. What put me at peace was the realization that teachers had new summer schedules too, college students were on break, and teen sitters were out there looking for jobs. That’s still true today. TLC For Kids has great summer nannies looking for work. As you put your summer care plan in place – and exhale – play a quick game I like to call “Two Truths and a Lie: The Tax Edition.”
Who said taxes aren’t fun?!
1. My summer nanny is not an independent contractor.
Truth!
Many families think a temporary or part-time nanny is an independent contractor, but the truth is that you’re her employer.
So even if he or she only works for you during the summer, the nanny is your employee in the eyes of the IRS and is covered by special protections such as minimum wage and overtime.
2. I can pay a summer sitter cash because she’s temporary.
False!
You aren’t supposed to pay any nanny or sitter earning more than $1,800 a calendar year under the table!
3. You Can Get Tax Credit for Hiring a Summer Nanny
Truth!
Say you hire a nanny to take care of your kids for the 13 weeks of summer – and you pay her $500 per week, for a total of $6,500 over the summer. The employer taxes on this wage amount will be about $600 (or a total of $7,100).
That’s the cost side. Now for the good news: tax breaks.
If you have a Dependent Care Flexible Spending Account (FSA) through your employer, you can set aside $5,000 for childcare expenses using your pre-tax dollars. An FSA can save you as much as $2,300 per year, depending on your marginal tax rate. That savings will bring your total cost down to about $4,800.
By putting her on the books, you’ve saved roughly $1,700!
If you don’t have access to an FSA (or missed the enrollment period for this tax year), that’s okay. You can still use the Tax Credit for Child or Dependent Care (a.k.a. the “Childcare Tax Credit”). It will save you up to $600 if you have 1 child or $1,200 if you have 2 or more children, bringing your total cost down to either $5,900 (save $600) or $6,500 (break even).
Remember, these tax savings are only available if you pay your summer nanny on the books and fulfill your “nanny tax” obligations.
I hope you find a great caregiver and have a wonderful summer. Along the way, if you have any household employment questions, just let us know. We’re here to help (888-273-3356).
Nanny Tax Amnesty
It is all too easy to fumble taxes when paying a nanny or other household worker. But, as the Wall Street Journal reported, the Internal Revenue Service is making it easier for people who may have mishandled such issues to make things right.
The new tax amnesty program targets employers who improperly classified employees as independent contractors, allowing them to voluntarily agree to begin treating these workers as employees going forward, while virtually eliminating any liability for past unpaid taxes. TLC for Kids relies on Breedlove and Associates, a national nanny payroll company for their expertise and according to this agency, any nanny is considered a household employee if they are paid $1800 or more per calendar year (for 2012 and 2013).
TLC For Kids strongly encourages all household employers to claim their nanny as an employee while filing taxes if they have met the monetary threshold and the nanny should be legally considered an employee of the household.
If you would like to take advantage of the IRS Tax Amnesty or have any questions on the Nanny Tax you can contact Breedlove and Associates at 888-273-3356 or by visiting Breedlove online.
Tax Benefits When Hiring a Nanny
It is Tax season. Have you filed your taxes yet? I haven’t BUT it’s on my “to do list” this weekend.
Here is some helpful information on qualifying for tax benefits from our friends at Breedlove and Associates. TLC For Kids has been referring our clients to Breedlove and Associates for many years.
Paying taxes tends to invoke negative feelings for most people. Fortunately for household employers, there’s a silver lining on your gray tax cloud – tax breaks. As long as you and your spouse are working or are a full-time student and have at least one child under 13, you’re in a great position to make back most, if not all, of your nanny taxes. Here are two ways you can save:
1) Dependent Care Flexible Spending Account. Many companies offer their employees the option to set aside up to $5,000 of their pre-tax earnings into a Dependent Care Account to pay for childcare expenses. This means there is no federal or state income tax, Social Security tax or Medicare tax on $5,000 of either you or your spouse’s income. Depending on your state and your tax bracket, this deduction will save you anywhere from $2,000 to $2,300 per year.
2) Child Care Tax Credit. If you don’t have access to a Dependent Care Account, you can claim the Tax Credit for Child or Dependent Care (IRS Form 2441) on your federal income tax return at year end. If you have one child, you can save up to $600 per year (20% on up to $3,000 in childcare expenses). If you have two or more children, your savings will be up to $1,200 per year (20% on up to $6,000 in childcare expenses).
Great News! If you have two or more children under the age of 13, you can use a combination of these two tax breaks in order to achieve a maximum of $2,500 in tax savings.
For many families, the tax breaks will offset a large portion of the employer tax costs. This is especially true for those employing someone on a part-time, seasonal or NannyShare basis. For a more fine-tuned estimate of how much your family can save from tax breaks, use the free Nanny Tax Calculator.