Senior Care Payroll and Tax Guide

senior care payrollHave you hired a senior care employee to work in your home? Follow this senior care payroll and tax guide to ensure you are compliant with employment laws.

Step 1 – Determine if you have an employee or independent contractor

The main difference between an employee and a contractor is that an employee operates under the control and supervision of his/her employer (you), and a contractor retains all control over themselves and their services.

Step 2 – Research Tax Laws

The IRS states that anyone paying an individual $1,900 or more in gross wages during the calendar year, legally employs a household employee and must comply with all state and federal tax laws pertaining to household employer status.

Step 3 – Follow Payroll Regulations

According to the Federal Labor Standards Act (FLSA), all senior care employees must be paid at least minimum wage, however, benefits such as room and board can account for a portion of that wage. There is no limit to the number of hours an employee can work – provided there is a mutual agreement. Overtime may be required in your state. Paid vacations, holidays and sick days are not required by law.

Step 4 – Submit Federal and State Forms - can be downloaded from our affiliate partner GTM Payroll’s website

  • Complete SS4 Form for an Employer ID #
  • Register for State Unemployment ID #
  • Register for State Withholding Tax ID #
  • Complete your State New Hire Report
  • Have employee complete W-4 Form
  • Have employee complete I-9 Form

Step 5 – Add Workers’ Compensation to Your Insurance Policy

New York State requires household employers to carry a workers’ compensation and/or disability policy if you employ someone on a full or part-time basis. These policies will protect you from lawsuits and liability in the event that your employee is injured on the job.

Step 6 – Set Up Dependent Care Assistance

You can pay your senior care employee with pre-taxed funds through an employer-sponsored Dependent Care Assistance Program (DCAP), if your employer offers this plan. A plan of this type would allow you to set aside up to $5,000 per year “tax free” money that you can use to pay for senior care. Contact your employer’s Human Resources department for more details.

Step 7 – Calculate Withholding Taxes

Our affiliate partner GTM Payroll Services offers a free wage calculator on their website.

Step 8 – Distribute Paychecks Regularly

You have the option of paying your employee weekly, biweekly, semi-monthly, monthly, or at any other agreed upon interval. Wages should always be paid via check so both parties have a record, and the amount should always be net (after all applicable taxes are withheld). You can also offer the option for direct deposit (check with your bank for details).

For more information, contact us at (518) 348-0400.

National Nanny Recognition Week

National Nanny Recognition Week 2014

Religious Accommodations for Nannies

religious accommodations for nanniesTitle VII of the Civil Rights Act prohibits discrimination based on a job applicant’s or employee’s religion.  But did you know that federal Equal Employment Opportunity (EEO) laws may also require household employers to provide religious accommodations for household employees, such as nannies, with sincerely held beliefs? As a best practice, we recommend adhering to the guidelines that follow.

While the law only requires an employer to make religious workplace accommodations upon request, there are some proactive best practices that you can take.  For example, you may wish to provide a limited number of “floating holidays” as part of a vacation/sick time/personal time policy that you have created.  Floating holidays allow employees to enjoy income replacement when observing religious holidays.

Another proactive measure is to discuss in advance any religion-based dietary concerns that may arise.  If your nanny will be preparing meals in your home, there may be certain foods that he/she will not wish to come in contact with based on religious beliefs. Employees observing religious practices by abstaining from eating or handling specific foods are likely to appreciate such consideration of their dietary restrictions.  Furthermore, employees generally welcome the freedom to be able to wear or display religious symbols at work.

It is critically important to recognize religious accommodation requests and have a strategy for responding in a manner that is not construed as being insensitive or discriminatory in nature. We recommend providing reasonable accommodations of an employee’s religious beliefs or practices, unless doing so would make your employee unable to perform the duties and requirements set out in the job description.

Last year, individuals filed almost 4,000 EEOC charges against employers across the county for religious-based discrimination claims.  The keys to remaining outside of that statistic are:

  • to discuss in advance any religious accommodations that will be made and to put those details in the work agreement
  • to ensure you are not discriminating against individuals based on closely held religious beliefs and are offering reasonable workplace accommodations to those who request them based on religion

For more information, contact us at (518) 348-0400.

Is Your Nanny Changing Her Name?

nanny changing nameQuestion: If your nanny or other household employee gets married and asks you to start issuing paychecks in their married name, what are your record-keeping responsibilities?

When an employee officially changes their name for marriage or any reason, the employee needs to:

  1. Present you with a new signed Social Security card, issued in the correct name. Make a copy of this for your payroll records.
  2. Fill out a new W-4 Form, reflecting the change in name, marital status and withholding allowances.

It is the employee’s responsibility to provide this information before a paycheck can be issued in their new name. This ensures that taxes are properly credited to the employee’s account, and that quarterly and year-end reports match the records of the Social Security Administration and the IRS.

A newly married employee may also want to make beneficiary changes on a life insurance plan and may need to fill out an enrollment change form to add the spouse to a health insurance plan. You can also remind them to notify the following organizations of a name change:

  • DMV
  • Post Office
  • Voter Registration
  • Banks
  • Credit Cards
  • Doctors

For more information, contact us at (518) 348-0400.

Hiring On Your Own?

hiring on your ownAre you hiring a nanny or household employee? Have you found the right one but aren’t sure what steps to take? Are you concerned about background checks, reference checks, interviews, and all the paperwork that the hiring process entails?

This is a very time-consuming process, and most families are unable to take enough time out of busy schedules to conduct the in-depth screening, interviewing, and paperwork needed for hiring a new person for their family.

Don’t go it alone – let the professionals at A New England Nanny take care of it for you!

A New England Nanny is a fully licensed and insured household placement agency, providing peace of mind to thousands of families for over 23 years. Once you have found the domestic worker you are interested in hiring, our experienced, professional staff will handle the following:

  • Applicant interview
  • Applicant reference checking
  • Criminal checks
  • DMV check
  • Social Security trace
  • Credit check
  • Drug screening
  • Complimentary payroll consultation (if applicable)
  • Manager consultation
  • Sample employment contract
  • Sample Work Agreement
  • Employee Handbook
  • Tools and tips for a successful employment relationship, including:
    • Daily time log
    • Medical care release form
    • Time off request form
    • Performance evaluation form
    • Incident report form

We are offering this valuable package for a one-time fee of just $1,000!
For more details and information on taking advantage of this service, please contact Melissa Schoonmaker, Director of A New England Nanny, at (800) 929-9213 ext. 7202.

Our Featured Nanny: Alicia!

photoWe are excited to introduce you to a member of our talented team, Alicia P.! Alicia joined A New England Nanny this past spring, and she has been a valuable addition to our staff. She is part of our temporary services team, caring for children of all ages and providing companion care as well. The most telling sign of her success? She keeps getting requested by families to come back!

Born and raised in Saratoga County, Alicia graduated from Ballston Spa High School and is currently taking classes in early childhood education. Her hobbies are reading, scrapbooking, and being outdoors as much as possible. Currently residing in Malta with her family, Alicia had this to say about why she enjoys working with A New England Nanny:

“I enjoy helping people – I think that’s why I like this job so much! Whether it be an elderly person or a child, I like to help. Children are so much fun and I enjoy helping them grow and learn. I have two children of my own, ages 6 and 7, and they are my world!”

If you would like to request Alicia for child care or companion care services, please contact us at (518) 348-0400.

Does My Nanny Have to Pay Taxes?

does my nanny have to pay taxes?A nanny or other employee who works in your home is responsible for reporting and paying required payroll taxes. It is worth making sure that they are aware of their responsibilities at the start of employment, if they do not already know. As a nanny, or other household employee, there are four key taxes that they are liable for:

  1. Social Security (OASDI) at 6.2% (2014). If the household employee is getting paid $1,900 gross or more in 2014, they are required to withhold and pay Social Security.
  2. Medicare at 1.45%. If the household employee is getting paid $1,900 gross or more in 2014, they are required to withhold and pay Medicare.
  3. Federal income Tax not required to be withheld*
  4. State income tax not required to be withheld*

*Federal and state income taxes are not required to be withheld unless agreed upon by the employer and the employee.

But this shouldn’t be confused with not having to owe any Federal and State income taxes. A nanny may pay their own income taxes either at the end of the year or as an estimated payment to the IRS and/or your state. Your must give your nanny a W2 form and a copy to the IRS indicating how much you have paid your employee and they must file that form with their personal tax return. More often than not, it’s a good idea to withhold the income taxes from their pay, so come April 15th they are not short a significant amount of income tax. By doing this they will then get a chance to get a refund when they file their own tax return.

Therefore, it is advantageous to withhold federal and state income taxes because it

  • helps employees distribute their owed income taxes throughout the year, rather than as a lump sum at the end of the tax year;
  • helps to document an employee’s legal employment history; and
  • ensures both employer and employee are complying with the law.

Please contact us at (518) 348-0400 for more information.

Retirement Plan for Nannies

retirement plan for nanniesWhile providing employee benefits is largely optional and seldom required by law, employee benefits greatly help the household employer attract and retain high-level nannies or other household employees. If you’re looking for a recruiting advantage over other families and a retention tool for your nanny, you may want to consider offering a retirement plan. Not only can it help your employee build an excellent source of retirement income and experience the benefits of tax-deferred growth, but by providing an attractive employee benefits package, you are helping to create a satisfied employee. Satisfied employees equal a happy workplace, which in turn equals a happy family and life for the employer.

We recommend the SIMPLE 401K Plan offered through the National Household Employers Association (NHEA) as a great retirement benefit to offer your nanny. Key features of the NHEA Domestic Workers Retirement Plan include (effective January 1, 2013):

  • Tax-savings: Household employees have the potential for a pre-tax savings via payroll deferral of up to $12,000; those 50+ years old can invest another $2,500 as a catch-up contribution
  • Flexibility: Household employees have the option to modify deferral amounts
  • Employer contributions: Family/employer MUST make a mandatory contribution on a dollar for dollar match basis up to 3% of the employee’s gross pay, which can be used to reward and retain valuable household workers
  • Self-direction of investments: Household employees have the ability to self-direct their investments from a list of monitored, low-cost mutual funds
  • Employee support: Household employees have access to advisors who can provide them with one-on-one advice
  • Transferability: If household employee changes families, but the new family continues to use GTM Payroll Services, that family can adopt the NHEA plan and continue 401K contributions OR household employee can roll the money to another qualified retirement plan or individual retirement account (IRA)

If you have any questions, please contact us at (518) 348-0400.

Nannies: What if Your Family Pays “Under the Table?”

paying nanny on the booksWe understand you may encounter working for a family that does not want to pay taxes for employing a nanny. Ask us for help in explaining to the family that it is truly in their best interest to pay you properly and legally. Some of the following reasons may also help:

  • There are two main tax breaks that can offset your employer’s tax costs. By legally employing someone in their home (paying “on the books”), they will be able to take advantage of one of the two following tax breaks:
  1. Dependent Care Assistance Program (DCAP) – Most companies provide this benefit and allow employees to contribute up to $5000 of pre-tax earnings to a Dependent Care account. They would then be reimbursed these tax-free funds to cover childcare expenses.
  2. Child and Dependent Care Tax Credit – For those who don’t have access to a Dependent Care Account, they can claim the Child and Dependent Care Tax Credit (Form 2441) on their personal income tax return at year-end. They can claim up to $3,000 of the un-reimbursed qualifying child care expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals. The credit can be anywhere from 20% to 35% of their qualifying expenses.
  • Your employer has to report your wages and the taxes they withheld for you on their personal income tax return. The IRS figures to catch a lot of people who forget to tell them about their nannies.
  • You can receive workers’ compensation, which in turn protects your employer if you get hurt on the job.
  • You will be eligible for Social Security and Medicare benefits, as well as unemployment insurance.
  • You will have a legal employment history, which is necessary to obtain a mortgage, car loan, or credit card.
  • Because it’s the law!

Need to point your employer in the right direction to pay you legally? Our partner GTM Payroll Services works with hundreds of families, nannies, and agencies around the country, helping them sort out taxes and comply with the nanny tax laws of the IRS and their state. This helps ensure a healthy working relationship between the family and their nanny.

For more information, please contact us today at (518) 348-0400.

Hiring a Nanny from Craigslist & Other Online Sites

hiring a nanny using craigslistMany people are familiar with online classified ad sites, such as Craigslist. These are low-cost, easy to use, and work much like posting an ad on a college bulletin board or in the local newspaper. These sites also advertise local nannies and families looking for nannies—and while these sites may be good resources for many things, there are two main drawbacks pertaining to hiring a nanny from Craigslist and other sites: time and safety.

Families looking for nannies or other household help via classified ads can expect to find it to be very time-consuming. Just as with a newspaper classified ad, the burden is fully on the seeker to do all the work; all the contacting, interviewing, checking and vetting, etc.

Safety is another key issue. Those advertising on these sites have paid to place an ad; they could be anyone. In addition, when using internet classified ads, anyone can view these ads and access your information. It is never wise to give out personal data (name, telephone number, address, email address) in a public area. These ad sites are not protected by passwords and are unsupervised for the most part. In contrast, traditional nanny hiring agencies and most reputable online hiring sites do not allow your information to be seen by the general public. It is always better to use an experienced and reliable website with a good reputation than a listing or online classified ad site—especially if you are hiring for the first time.

There have been many news articles on the safety issues of hiring someone using a site like Craigslist. Although the site, and many articles, warn the users of criminal misuse and instead encourage those who find jobs on the site to meet in a public place, many users do not heed the warning. There have been cases where criminals have posed as babysitters. Obviously, care should be used if posting an online classified ad, just as you would be vigilant about the candidates who contacted you about a newspaper ad or from a bulletin board. With your family’s care, no amount of precaution can be considered too much.

For more information, please contact us at (518) 348-0400.