Posts Tagged ‘nanny taxes’

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.

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. 

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 

Why You Can’t Give Your Nanny a 1099

What to do when you don’t get a W-2

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.

How to Use Your Childcare Tax Credit

 

 

April 15th is almost here and many of you are working on filing your taxes.  Over the last few weeks TLC for Kids has received calls and emails about how to handle nanny taxes.  We are not tax experts at TLC for Kids, so we recommend using Homepay for all your household employment needs.   Here is some information on nanny taxes that you may find helpful.

Paying taxes tends to invoke negative feelings for most people. Fortunately for household employers, there’s a silver lining– 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.

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.

 

Understanding Nanny Taxes

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.