Did you know that household employers are not legally obligated to pay for ANY 
holidays or time off to their employees*? It is entirely up to the employer to decide if such a benefit will be offered or not. Clearly this is something that should be discussed when interviewing, and memorialized in a written work agreement. We know from experience this is a big concern for household employees. In some situations, applicants will even choose one job over another based on the holiday and paid time off in the job offer.
Full time household employees generally expect some baseline provision of paid holidays and vacation. Sadly, all too often both the family and the employee fail to discuss and agree to specific terms when interviewing, and may not have even put the agreement they made in writing. When holidays approach, such as the upcoming July 4th holiday which falls mid-week this year, these employees worry about whether they will be paid or not.
Our company receives many phone calls, especially around the major holidays, concerning paid time off. Common questions are: Will I receive pay on holidays? Will I be paid for those regular days when I am not needed due to holiday travel or entertainment? Will I even have the holiday off from work or will my employer require me to work?
Talking about vacation, paid holidays, and paid time off, right from the beginning, is critically important. Misunderstandings and miscommunication about these topics will affect your relationship with the nanny or any other household employee. Spelling out the policy for paid time off will help to avoid hurt feelings and uncomfortable situations. HomeWork Solutions recommends, as a best practice, to include this policy in your work agreement.
Families who do not plan to offer paid holidays should make this very clear at the time of hire.
Failing to plan for time off is never a good idea - yet it happens frequently. What are the norms?
Full time household workers typically receive a minimum of 7-8 paid Federal holidays per year. Additionally, most full time household workers expect to be paid for their regularly scheduled time every week, even if the family decides to take additional holiday time and the employee is not needed.
Permanent part time household workers are typically paid only when the Federal holiday (or its observance) falls on a regularly scheduled work day.
Federal holidays that fall on a Saturday are observed on the prior Friday, and those that fall on a Sunday are observed on the following Monday. Many families with different faith traditions sometimes 'move' the Christmas holiday, taking into account the faith tradition of their household employee. These arrangements ideally should be discussed and defined in the written work agreement.
Conclusion: All time off and compensation arrangements should be discussed and clearly documented in a written work agreement. Taking the time to be specific and have it in writing avoids misunderstandings later. Additionally, your nanny deserves to be able to plan for any reduction of her weekly income in advance. You would enjoy your vacations better, knowing there is no fussed nanny waiting for you at home!
*Federal law is referenced. A few localities and states mandate some paid time off.
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!
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!
Related Links
The American Taxpayer Relief Act of 2012, passed by Congress this January 1, included some substantial good news for employees whose employers supplement their public transportation expense.
For 2013, an employer can provide a TAX FREE stipend of up to $245 per month to the nanny or housekeeper for commuting on public transportation. This MUST be used for bus, subway, commuter rail or other public transportation - NOT for gas and tolls to commute in a private automobile.
The 2012 maximum monthly stipend increased retroactively from $125 to $240 per month in the same legislation.
If you are a household employee who uses public transportation, this is a win-win for both you and your employer. This should be a consideration in any compensation discussions between the employer and employee. Taxable income could be traded for this non-taxable benefit, saving the employee as much as $500 or more in taxes over the year.
We have a tip sheet Negotiating Nanny Compensation and Benefits that contains more valuable information.
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.
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.
~~~~~~~~~~~~~~~~~~~~