Posts Tagged ‘nanny taxes’
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.
Every Family Needs A Work Agreement With Their Nanny
TLC Family Care has always asked families and nannies to complete a work agreement before the nanny begins. Our friends at Breedlove and Associates share with us why the nanny work 
agreement or nanny contract is so important.
Hiring a nanny can be both exciting and nerve-wracking, especially for ultra-busy, sleep-deprived families. Often, the obsession with finding the perfect caregiver causes families to overlook important employment details.
The Mistake
A Virginia family began searching for a nanny to care for their new bundle of joy. After an emotionally-draining 6-week quest to find the ideal nanny, they hastily agreed — verbally — on a work schedule and hourly rate. The nanny started work the next day without any kind of written agreement in place.
The Law
In some jurisdictions, a basic employment agreement is legally required. Whether required or not, we highly recommend that families use a placement agency or an attorney who can facilitate a comprehensive contract between family and nanny.
The discipline of drafting detailed job responsibilities, house rules, emergency procedures, work schedule, vacation/sick time procedures, compensation, pay frequency, communication/review procedures, etc. radically reduces problems and misunderstandings. It also tends to lengthen relationships because it makes the employee feel like a valued professional. Finally, it can be an important and cost-effective means of arbitrating any family/nanny issues.
The Mess
Within a few weeks, the honeymoon was over:
The family had trouble hiding frustration with the nanny’s housekeeping habits. She was tidying up the baby’s room and kitchen as well as cleaning toys and baby clothes. But the family had expectations of the nanny doing the family’s laundry and light housekeeping.
The nanny resented not getting paid for Labor Day. She needed the money and had assumed that she’d get paid for major holidays.
When the nanny got her first pay check, she was confused by the tax withholding’s. She thought the agreed-upon amount would be her “take-home” pay.
The Outcome
The family talked to friends and did some online research into the typical duties of nannies. They quickly realized that nanny job descriptions vary wildly and that they had done a poor job of articulating their desires at the beginning of the search process.
Similarly, although the family had done some research on household employer tax and legal obligations, they had not discussed the compensation and benefits offer at the appropriate level of detail for their nanny.
Despite the rocky start, the family really liked the way the nanny took care of the baby so they made a considerable effort to keep her. They created an employment agreement and sat down with her to discuss all the “relationship details” they should have discussed a month earlier.
Unfortunately, the nanny took another job shortly after their meeting. She did not feel valued or respected and opted for a fresh start with another couple.
The family hired their next nanny through one of our agency partners. The agency used a thorough job description process to focus the search on nannies who met the family’s expectations. After a comprehensive vetting process, the agency held the family’s hand through an employment agreement that left no room for misinterpretation or confusion. It’s been almost 18 months and the relationship is going strong.
How the Whole Thing Could Have Been Avoided
When searching for household help, busy families are tempted to take short cuts. Aside from being pressed for time, it can feel somewhat awkward to have a formal contractual agreement with someone with whom there is such a personal relationship.
However, in our experience, the formal work agreement is the single-best predictor of the long-term success of the relationship. Without one, the relationship almost always seems to be rife with misunderstandings and resentment. With one, the relationship enjoys clear direction and increased professionalism.
We encourage families to retain a reputable placement agency that can guide them on employment agreements and other important aspects of due diligence involved with household employment. It dramatically enhances the odds of an endearing and enduring employment relationship.
If you have additional questions about this or any other aspect of household employment tax and labor law, visit them online.
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
Paying Your Nanny Legally is the Right Thing To Do
Every January, we’re asked by both nannies and parents on how to file taxes as an employee / employer. A nanny is considered a household employee and should receive a W-2. Many times both nannies and parents find this process confusing. There are some wonderful services out there to help both parties navigate the complicated world of nanny taxes.
Still unsure what you need to do? Our friends at HomeWork Solutions have a wonderful library of resources with all the answers.
Paying Your Nanny Legally is the Right Thing to Do
Nanny Pay and the Overtime Rule of 2016
On December 1st, 2016 the final rule for the overtime laws in the Fair Labor Standards Act takes effect. The rule simplifies overtime laws and makes them easier for employers and employees to understand.
The final rule will:
- Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
- Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
- Strengthen overtime protections for salaried workers already entitled to overtime.
- Provide greater clarity for workers and employers.
Nannies, and other domestic workers, are non-exempt and protected under The Fair Labor Standards Act. Therefore, a nanny who works over 40 hours in a week is required to earn time and a half for those additional hours.
For example, lets say a nanny works 45 hours a week and earns $617.50. Her hourly salary is $13/hr for the first 40 hours and $19.50 for the additional 5 hours worked that week.
Watch the video for more information on nanny overtime pay and the Fair Labor Standards Act.
Monday, April 18th is Tax Day!
Taxes are due in just a few days! As a household employer are you looking for a way to reduce some of your tax burdens?
GTM and Associates recommends a few ways you can do this.
1. You can reimburse your dependent care expenses with pre-tax funds through an employer sponsored Flexible Spending Account. Check with your company’s HR department to see if this works for you.
2. You could also take advantage of Child and Dependent Care Tax Credit on your income tax return.
If you need help with any of these options please contact GTM and Associates at 1-800-929-9213.
Don’t forget that TLC is here to help you with all your in home childcare needs. If you are interested in hiring a full time, part time, summer or after school nanny visit our website at tlcforkids.com.