2018 Nanny Tax Threshold Increases

2018 nanny tax thresholdThe Social Security Administration recently released its employment coverage thresholds for 2018.

Social Security and Medicare taxes (commonly referred to as “nanny taxes”) must be paid by the family and the employee for any household workers, such as nannies or housekeepers, who earn $2,100 or more in cash wages in 2018. This is a $100 increase to the threshold which was last changed in 2016 to $2,000.

Wages paid to a spouse, child under age 21, parent, or any employee under the age of 18 do not fall under the nanny tax threshold.

Employers must pay 7.65% (Social Security at 6.2% and Medicare at 1.45%) in nanny taxes. The same amount can be withheld from the employee’s pay, or the employer can pay their worker’s share and not withhold. The total Social Security and Medicare taxes must be 15.3% of cash wages.

For more information on the nanny tax threshold, visit Employment Coverage Thresholds on the Social Security Administration website.

Learn more about paying your employee legally, and contact us at (518) 348-0400 for more information.

Proposed Regulations to Help Prevent Identity Theft

regulations to help prevent identity theftFresh off the recent Equifax breach , the IRS has proposed regulations that may help individuals prevent identity theft when it comes to their W-2s.

The proposal would allow truncated Social Security numbers (SSNs) on Form W-2 in the form of Taxpayer Identification Numbers (TTINs), which would hide full SSNs from identity thieves.

Employers would be permitted to voluntarily truncate their employee’s SSNs only on the copies of Form W-2 that are given to employees. Using TTINs on any documents – including tax returns or statements – that must be filed with or sent to the IRS or Social Security Administration would not be allowed.

Public comments on the proposed regulations are being taken by Dec. 18, 2017. Visit Regulations.gov to submit your comment.

New Deadline for Filing Your Nanny’s W-2

new deadline for filing your nanny's w-2Employers – including household employers – will need to file their employees’ W-2 forms much earlier next year than in previous years. The Protecting Americans from Tax Hikes (PATH) Act of 2015 was signed into law last December, and among the many provisions is a new W-2 filing deadline for employers’ 2016 forms. That deadline for submitting forms to the Social Security Administration (SSA) is January 31, 2017. That is also the date by which employees must receive their own W-2 copies, which means if there are any errors on the forms, there is no time to make corrections before they need to be filed with the SSA. It should be noted that these changes apply regardless of whether an employer submits paper forms or electronic ones.

The PATH Act also provides a safe harbor from de minimus (minor) error penalties, including relief of up to $25 for withholding errors and up to $100 for other errors.

Household employers that do their own payroll should begin preparing now for this new deadline, as the time frame in which to get any W-2s in order is now much shorter than it has been.

Using a company like our affiliate GTM Payroll Services, however, removes the burden from the employers. GTM’s service ensures their clients’ nannies and other employees get their W-2s on time, and that they get filed with the SSA on time as well.

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

Nanny Tax Threshold for 2016

nanny tax threshold for 2016The Social Security Administration (SSA) announced yesterday that the nanny tax threshold for 2016 will increase to $2,000, up from $1,900 this year. This affects all employers of domestic workers – if you pay your employee at least $2,000 in 2016, you are required to pay Social Security and Medicare taxes (also known as FICA coverage). These tax rates will remain the same for 2016 as they are now – 6.2% for Social Security and 1.45% for Medicare.

A coverage threshold are wages that are required to be taxed under the Social Security program. Earnings that are less than the threshold amount are not subject to Social Security and Medicare taxes, but also do not count toward future benefits.

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