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.

Recordkeeping Requirements for Household Employers

recordkeeping requirements for household employersAccording to the Fair Labor Standards Act (FLSA), employers – including household employers – are required to keep records on wages, hours, and other items as specified by DOL recordkeeping regulations. No particular form is required, but certain identifying information about the employee and data about the hours worked and the wages earned is required by the FLSA. The law requires this information to be accurate. Recordkeeping requirements for employers include the following:

  1. Employee’s full name and social security number.
  2. Address, including zip code.
  3. Birth date, if younger than 19.
  4. Sex and occupation.
  5. Time and day of week when employee’s workweek begins.
  6. Hours worked each day.
  7. Total hours worked each workweek.
  8. Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”)
  9. Regular hourly pay rate.
  10. Total daily or weekly straight-time earnings.
  11. Total overtime earnings for the workweek.
  12. All additions to or deductions from the employee’s wages.
  13. Total wages paid each pay period.
  14. Date of payment and the pay period covered by the payment.

Payroll records should be kept for at least three years; wage computation records, such as time sheets, work schedules, and changes in wages, should be kept for two years.

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

Household Emergency Plan

household emergency planIt is important for families to prepare for natural disasters and other types of emergencies by having a plan in place for everyone to follow. Below are steps to creating a household emergency plan provided by the State of New York:

  • Meet with your family members and discuss the dangers of possible emergency events including fire, severe weather, hazardous spills, and terrorism.
  • Discuss how you and your family will respond to each possible emergency. Know how to contact all family members at all times. Think 24/7 and 365.
  • Discuss what to do in case of power outages or personal injuries
  • Draw a floor plan of your home. If possible, mark two escape routes from each room.
  • Select two places to meet: a spot outside your home for an emergency such as fire, and a place away from your neighborhood in case you cannot return home (a real possibility during the day when most adults are at work and children are at school).
  • Identify an out-of-town friend or relative as your “emergency family check-in contact” for everyone to call if the family gets separated. Make sure all family members have the correct phone number. It is often easier to call out-of-town during an emergency than within the affected area.
  • Post emergency contact numbers near all telephones. Include local police, fire and health departments, poison control, your children’s schools, doctors, child/senior care providers and insurance agents.
  • Make sure everyone knows how and when to call 9-1-1 or your local emergency medical services phone number.
  • Install safety features in your home such as smoke detectors, fire extinguishers, and carbon monoxide detectors.
  • Inspect your home for potential hazards – and correct them.
  • Have your family learn basic safety and first aid measures.
  • Keep family records in a waterproof and fireproof safe.
  • Have emergency supplies on hand.
  • Teach adults how to turn off the water, gas and electricity at main switches. If for any reason you do turn off natural gas service to your home, call your natural gas utility to restore service. DO NOT attempt to restore gas service yourself.
  • Make arrangements for your pets. Most shelters do not allow pets. Prior to an emergency, contact your county or local emergency management office and ask them where you could leave your pet. Have ID, collar, leash and proof of vaccination for all pets. Have current photos of your pets in case they get lost.
  • PRACTICE the Plan!

Visit New York’s disaster preparedness website for more information, and get tips on preparedness kits here.

Summer Dress Code for Nannies

summer dress code for nanniesSummer has arrived, and that means hot weather and time spent by the pool. The summer heat also means you’ll want to wear less clothing; but what is appropriate attire for a nanny during this season? Here are some tips on dressing professionally during warm weather.

Suggestions for What Not to Wear

 

  • High heels – even if you are confident you can walk in them (or more likely run in them), they are not suitable while caring for very active children.
  • Sandals – depending on the activities you have planned for the day, open-toed shoes may prove challenging when chasing kids around the playground or park. Plus you never know what will get spilled on those toes.
  • A favorite, stylish, expensive outfit – it will get ruined, either by spit-up, food, arts and crafts materials, or most likely it will get soaking wet from summer water play.
  • Low-cut shirts – nannies should always dress appropriately while in the children’s presence, and smaller kids will certainly pull and tug at shirts, so the lower a shirt is cut, the more “exposure” you risk.
  • Short shorts – again, you want to be a role model for the children and wearing short shorts, “Daisy Dukes,” etc., should not be considered proper nanny attire.
  • Long, dangling earrings or jewelry – be careful with this as well. Long earrings and necklaces can get pulled and caught on things, particularly if you’re running around a playground.
  • Swimwear – no bikinis, please! Anything too revealing is inappropriate when caring for children.

 

Suggestions for What to Wear

 

  • Comfy clothes – you want clothes that will stretch, not tear, when they are pulled. Cotton shirts will make the heat more bearable, and are durable.
  • Tank tops – these are fine as long as they are not low-cut; spaghetti straps are probably too revealing.
  • Cargo shorts or pants – these are a great way to keep cool and comfy, plus you’ll need those pockets for all the treasures the kids will find at the park or beach!
  • Comfy shoes – you need to be able to run and be active! Comfortable sneakers are always a good choice.
  • Rain gear – rainstorms can pop up unexpectedly around here during the summer, so if you’re outdoors with the kids, having a raincoat or poncho may come in handy (as will an umbrella).
  • Sweatshirt/sweater – sometimes the temperature drops lower than predicted, even during the summer, especially if it’s a windy day by the lake, so keep a sweatshirt or sweater around just in case.

 

You can dress professionally and still be comfortable during the summer months! Please contact us if you have any questions at (518)348-0400.

 

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Tax Credit for Summer Child Care

tax credit for summer child careAre you hiring a summer nanny to care for your children? Or will you be taking advantage of the many day camp options available during the summertime school break?

While temperatures and extra expenses seem to escalate quickly during the summer months, the IRS has some good news for parents:  Those additional expenses may help you qualify for a tax credit for summer child care!

Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year.

  1. The cost of day camp may count as an expense towards the Child and Dependent Care Credit.
  2. Expenses for overnight camps do not qualify.
  3. Whether your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
  4. The credit can be up to 35 percent of your qualifying expenses, depending on your income.
  5. You may use up to $3,000 of the non-reimbursed expenses paid in a year for one qualifying individual, or $6,000 for two or more qualifying individuals to figure the credit.

For more information, check out IRS Publication 503, Child and Dependent Care Expenses.

For specific questions, contact us at (518) 348-0400.

Educational Assistance for your Nanny

educational assistance for employeesThere are many benefits household employers can offer their nannies or other employees; benefits serve as both a retention tool for current employees, as well as a recruitment tool for new hires. One of these benefits to consider is that of educational assistance.

Although optional for you to offer, educational assistance for employees is beneficial in providing a satisfying workplace. Guidelines provided in your employee handbook may include: educational pursuits that will be covered (e.g., classes must be provided by an accredited educational organization and relate to the employee’s occupation); the limit available for educational assistance per year; educational expenses that are covered (e.g., tuition only, tuition and books, etc.); and, what requirements your employee must meet to receive assistance (e.g., the employee must achieve a passing grade as defined by the educational organization). Also, you may consider paying for professional membership fees, industry conferences, or trade journal subscriptions.

This education, as well as online learning courses that educate employees, help promote professional growth and elevate employee performance—making the educational benefit a win-win proposition for both the employer and employee. It is important for you as a household employer to decide whether access to education is an important employee benefit, and if so, how often.

For 2014, employers can claim up to $5,250 tax-free for employer-provided educational assistance; graduate-level course work is also covered. The IRS does state that employers who offer tax-free educational assistance are required to have a written plan describing the terms and benefits. This is why laying out an educational assistance plan in your handbook or Work Agreement is essential. Read more about educational assistance tax benefits here.

With these guidelines, you should also include information on the process your employee must follow for assistance. Consider whether your employee needs to:

• provide you with a course description and a written request for assistance prior to the start of a class

• obtain a signed approval from you prior to the start of class in order to be reimbursed for expenses

• achieve a specific grade or higher to obtain reimbursement.

Be precise to ensure that your employee understands what is required.

Nanny vs. Au Pair: What’s the Difference?

nanny vs. au pairWhat is the difference between an au pair and a nanny?

An au pair is a foreign national living in the United States as part of the host family, who receives a small stipend in exchange for babysitting and help with housework. Legally authorized to live and work (only as an au pair with the host family) in the United States for up to two years in order to experience American life, an au pair may or may not have previous child care experience. Au pairs typically don’t make a career out of childcare work as nannies do. An au pair is usually provided with a weekly stipend that is calculated as the federal minimum wage, less an allowance for room and board. According to the International Nanny Association (INA), au pairs may not be placed in homes with infants three months of age or younger, unless a parent or responsible adult will be in the home supervising the au pair. An au pair may not be placed in the home with a child two years of age or younger unless they have 200 or more hours of documented child care experience. Learn more here.

In contrast, a nanny works in the household, where he or she may live in or live outside the home, to undertake all tasks related to the care of the children. Nannies are typically seeking long-term career-building experience in child care, not necessarily a cultural exchange like an au pair. The INA defines a nanny as an individual “employed by a family on either a live-in or live-out basis to undertake all tasks related to the care of children.” Duties are generally restricted to child care and related tasks, such as preparing a child’s meals and doing a child’s laundry. Although a nanny may or may not have had formal training, she or he often has a good deal of actual experience, and oftentimes has been educated in child development. A nanny’s workweek usually ranges from forty to sixty hours, and a nanny typically works unsupervised.

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

Paying Your Nanny Off the Books: Not Worth the Risk

paying your nanny off the booksMany household employers mistakenly assume that because the employment of domestic work is within their own home, they are unlikely to get caught paying their employee illegally. Because there is a long history of household employment being paid in this way, many employers assume that this is the accepted way of paying for work in the home. Even if they are aware of the consequences, many believe getting caught is so unlikely to happen that the risk is worth it. This is not the case. Paying your nanny off the books may mean an employer is investigated by the IRS. Some of the circumstances where this might occur include:

  • If you have formerly paid payroll taxes on past household employees but then do not with a new employee.
  • You use an agency or an online registry and the IRS audits that entity for information about household employers not reporting payroll taxes.
  • You terminate an employee who has not been paid legally and they complain to the IRS.
  • You have mistakenly assumed the employee is an independent contractor and not an employee, so have not withheld the correct tax obligations.
  • A former employee files for unemployment benefit but cannot get it because you have not paid unemployment tax.
  • An employee is injured on the job so tries to claim worker’s compensation and has to name you as the employer.
  • A retired employee wants to claim social security and reports working for you.

Ignorance is no excuse for breaking the law. As an employer, it is critical for you to understand the laws and regulations governing household employment, payroll taxes, hiring, and so on. By using a household payroll service like GTM Payroll, you’ll spend less time worrying about complying with laws and spend more time with your family. Contact us for more information, or simply get started today with a FREE household payroll quote from GTM!