Today is the day we celebrate FAMILIES around the globe. What does the word family means? According to Wikipedia “In human context, a family (from Latin: familia) is a group of people affiliated by consanguinity, affinity, or co-residence. In most societies it is the principal institution for the socialization of children.”
Think about “An institution for the socialization of children”. How important is this? Children are our future. As a company, we hear how families struggle with the care of their children and aging or disabled family members on a daily basis. Parents and adult children worry, struggling to locate a loving and caring person, and to insure their loved ones safety. They know the importance of finding a competent and caring person to take care of their loved ones while they have to go to work.
Nannies and Senior Caregivers are often the most ideal solution! These special people specialize in the care, protection and companionship of our loved ones in our family home. These caregiving professions are clearly important for our society and its development. These loving and caring individuals whom we trust our kids and elders are not only our employees; they become, with time, integrated members of our family.
Family is not only those whom we are related by consanguinity; family is also the people we care for and who care for us. We have received so many phone calls from clients letting their nanny or caregiver go because the family needs have changed and the service is no longer needed. There is so often genuine sadness on their part to be severing this relationship. Many families (those who can afford this option) will actually evolve their nanny’s job to that of a Household Manager just to keep her around.
HomeWork Solutions celebrates today (and everyday!) all of our client families and those considered as family. We want to say Thank You to all care providers for all you do and for the valuable support you add to our community and the success of our families around the US!
It is an important day at HomeWork Solutions; we celebrate today as the family we are ourselves!
The HomeWork Solutions Family
We post updates about payroll and taxes regularly on both our blog and our Facebook page. Subscribe online or LIKE our Facebook page to receive this important information at your fingertips!
Personal finance expert Jane Bryant Quinn recently discussed the "nanny taxes" on the popular TV show The Street - stressing that these are not just for nannies! We have posted often about the obligations of families who hire cleaning ladies, maids, and senior caregivers to report and pay the employment taxes. The IRS recently announced an IRS Nanny Tax amnesty program, promising stepped up enforcement going forward.
Ms. Quinn's presentation is short and totally on point:
(The Street)
HomeWork Solutions has worked with thousands of families nationwide for over 20 years helping them understand and solve their "nanny tax" headaches. We offer free telephone consulations - call us at 800.626.4829 today. Go Ahead - Simplify!
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Q. We have a regular babysitter. Most weeks she watches the children 3 afternoons/evenings a week, just until I get home from work, so my wife can attend classes. We only pay her $200 a week. I have heard about "nanny taxes" but since she is not full time or a real nanny, that doesn't apply to me, right?
A. This is a common question, and unfortunately in almost all cases the answer is YES, the "nanny taxes" do apply to you.
Here is the reality. According to the IRS, if you hire someone to do household work for you and if you control, or have the right to control, what work is done, and how that work is done, this person is your employee and you have employment tax obligations, the group of taxes often referred to as the "nanny taxes."
It does not matter whether you give your babysitter great latitude, but rather that you have the right to control the work. Your household worker can work on a full time or part time basis. It does not matter whether the worker lives with you or not. You may pay hourly, daily or a salary. It does not matter how the employee refers to herself or how you refer to him/her in an employment contract.
What is household work?
Household work is defined as work done in or around your home. Examples include:
- Babysitters
- Senior Caretakers
- Housekeepers
- Maids
- Cleaning Person
- Nanny
Example: You pay Mary to watch your child and do light housework five days a week in your home. Mary follows your specific instruction regarding your child's diet, activities and household duties. Mary is your household employee.
Some workers are not your employees
If only the worker controls how the work is done then the worker is not considered your employee, but is self-employed. Someone who performs child care services in his or her own home is not your employee. A maid who is paid by another company to clean your house or a worker that an agency provides and pays directly are not your employees.
Example: You hire ABC Maids to provide weekly house cleaning services and make all payments to the service. They provide their own tools and supplies and hire their own help, although you do request that they use your vacuum in the house. The cleaning person sent to you home is not your employee.
Occasional Babysitters: If your occasional child caregiver is 17 years or younger AND a full time student, or if you will not pay your babysitter more than $1800 in the full year (that is less than $35 a week!) you may be exempt. IRS Publication 926 has more details.
Questions? We offer free telephone consultations and welcome your phone calls. We also encourage you to download the household employer guide linked below - this free publication will help you understand your responsibilities for your household workers.
Note: Special thanks to our guest blogger, author Marta Perrone (The Professional Housekeeper). Marta is an expert in the household staffing industry. We are pleased to share her discussion on transitioning a nanny to the nanny/housekeeper role. Marta is a professional trainer of housekeepers, nannies and household managers.
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A common difficulty when hiring a nanny is the discussion of what entails “light housekeeping”. Everyone has a different view on this, especially the nanny. The new mom has her hands full with a first child and is overwhelmed with the idea of caring for an infant along with cleaning and organizing a home. Her only hope is that the nanny she just hired will jump in and assist. Typically most nannies are asked to do “light cleaning” but would prefer that it be referred to as “household chores”. Somehow when a professional nanny hears the word “housekeeping” they cringe like having heard nails on the blackboard. You can call it anything you want; the bottom line is that it comprises the very basic concept of “cleaning” and is a mandatory function of nannies as it relates to the children.
So let’s break it down so we clearly understand what “Light Housekeeping” really means. Here is the list:
- Maintaining the child’s room and bath clean and organized*
- Cooking for the children and cleaning the kitchen after meal preparation – including sweeping floors and cleaning the breakfast table, washing necessary dishes, cleaning counters and removing trash
- Organizing the playroom, family room or any room where the children play
- Organizing and keeping toys sanitized
- Light dusting and vacuuming in rooms where children convene
- Laundry belonging to the children
*Sometimes a family has a housekeeper either 1-5 days per week who may be responsible for cleaning all the bathrooms and bedrooms. If so, then the Nanny would be relieved of this duty.
If a nanny is accustomed to doing these household chores and doesn’t have an issue with it, then as the children grow up and transition to full days at school, the nanny (with more time on her hands) may increase these efforts and become more of what is known as a “Full Charge Nanny/Housekeeper”.
After several years, often nannies become so close to the family that they choose to make this transition in spite of the change in responsibilities. However, if a nanny wants to primarily work with infants and toddlers without being overloaded with housekeeping, she will electively not make this transition and move on in search of a new family. There is no one-size-fits-all solution, but rather solutions that match the needs, skills and desires of all parties involved.
Do you have a regular person who comes to your home to provide housekeeping, maid or cleaning services? Do you know that this individual is probably your employee under common law and the Internal Revenue Code?
Any individual whom you employ to provide services in your home whom you pay directly AND whose total payments in the calendar year meets the IRS household employment threshold ($1700 in 2011 and $1800 in 2012) must receive a W-2 from the employer (family) and the employer must pay the payroll taxes.
Household employment taxes - known as the "nanny taxes" - include:
- Social Security & Medicare Taxes (13.3% of Gross Wages - employer may collect 5.65% from the employee via deductions.)
- State Unemployment Taxes where required.
- Federal Unemployment Tax (FUTA) where required.
The employer is legally obligated to pay (remit) both employee and employer portions of Social Security and Medicare taxes. Should the employer fail to collect this tax from the employee via periodic payroll deductions, the employer remains responsible to remit or pay the tax to the IRS. The household employee CANNOT remit their share of Social Security and Medicare tax independent of the employer.
Many families try to classify their weekly (bi-weekly, monthly) cleaning ladies as independent contractors. In the vast majority of circumstances, this is a total legal fiction. This usually only works if the worker is properly incorporated, bonded and licensed in the trade and maintains "corporate formalities."
If you wish to avoid this obligation, we recommend that you engage a cleaning service. The service will decide who to send to your home to do the cleaning, and you will avoid any payroll tax obligations. Examples of such firms are Merry Maids, the Maid Brigade, XYZ Cleaning Services, Molly Maids - you can locate by Googling "home cleaning service YourTown YourState." When you hire a service, you make your payments to Cleaning Services Inc. or Cleaning Services LLC - and not to Mary Jones.
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