Recently, Dr. Judith L. London published a book of 54 stories detailing the challenging and sometimes heroic lives of caregivers of Alzheimer's sufferers. And it's no wonder Dr. London found it compelling to collect a these stories in one place: in a study conducted by Stanford University and the Alzheimer's Association, more than 15 million people provide unpaid care for family members, or even friends, who suffer from the disease.
Though the book, featured in Jane Brody's Personal Health column in the New York Times, focuses on the challenge of caring for Alzheimer's patients, the themes resonate with anyone caring for an ill or incapacitated family member. While no one can devote the same level of love and attention as those in the close, personal circle of family and companions, stress on those very caregivers can outweigh the merits of their heroic efforts.
Many stories highlight the power of outside stimuli - a scent, a location, even an experience like playing golf - can bring a memory to the fore, and a joyous moment shared. A caregiver's appreciation for these infrequent glimpses into the person who once was can be energizing and enojoyable. As the disease progresses, however, the stress and strain, particularly on older companions and spouses, takes its toll.
Families eventually recognize the necessity of living separately from an ailing spouse, however, many are trying to manage at home, hiring eldercare specialists and senior care aids to offer a break, and and helping hand with the more cumbersome tasks. This requires planning and familiarity with a series of specific processes that insure the right kind of assistance. Knowledge of background screening, hiring and interviewing techniques, methods for writing a thorough work agreement and payroll matters make the journey difficult and sometimes overwhelming. This means many spouses and families will take on the responsibility, without getting help, rather than navigate complex, and sometime risky, landscape of eldercare hiring.
When a family confronts its own limitations in caring for a senior at home, securing the help of a Geriatric Care Manager may help. These specialists are trained to evaluate different personal and circumstantial situations, and can direct families to the right kind of help - in direct care, or with the logistics of hiring help at home.
A leader of caregiver support groups, speaker for the Alzheimer’s Association, and presenter at numerous conferences, Dr. London is WebMd expert for its Alzheimer’s Community. The book is reviewed and available on Amazon.com.
For more information regarding hiring in-home care for someone suffering from Alzheimer's or otherwise requires in-home care, download this guide to conducting successful background screening for senior care assistance.
The Department of Labor extended minimum wage and overtime rules to most home care workers who aid the elderly, and the media is running to provide perspective on caring for aging Americans. The new rules, which go into effect Jan. 1, 2015, change how the companionship exemption to minimum wage and overtime under the Fair Labor Standards Act works. Ashlea Ebeling of Forbes recently published a comprehensive article on this matter called, “Hiring Help For Aging Parents? Read This First. “If you’re fortunate enough to have parents living into their golden years, there will inevitably come a time when you notice that everyday tasks become everyday obstacles, and getting reliable, affordable and caring help becomes the holy grail.
Ms. Ebeling found a helpful resource in HomeWork Solutions’ president Kathy Webb, who expressed concern that changing rules may confuse families who are beginning to consider hiring elder care help for a family member.
Under the new ruling, an employee designated as a “companion caregiver” is protected under the overtime and minimum wage rules; but this designation has limitations. For example, Agency employed caregivers cannot hold the “companion” designation, and therefore the new ruling is likely to increase the costs of agency-employed caregivers. Private families may still utilize the "companionship exemption" so long as the caregiver provides no general household services and personal care services do not exceed 20% of the caregivers time.
Ms. Webb noted, “A senior who first just needed help with transitions, for example, might decline to where they need help with grooming, bathing, and dressing, and once the duties creep and the 20% gets exceeded, the caregiver is no longer considered a companion under the law.” The Forbes article featured Home Work Solutions’ chart that outlines the acceptable tasks under the new ruling, so families can begin to determine if the help needed is companionship or caregiving, and the tax, overtime and minimum wage consequences of each.
Some of the companionship tasks typically include:
- Shared meals
- Accompaniment to appointments/social outings
- Ensuring physical well being and general health
Some of the care giving tasks typically includes:
- Meal preparation
For more information about hiring elder care, download our free Family Guide To Senior Care Alternatives.
Immigrants, including undocumented immigrants, must comply with the same tax laws as U.S. citizens- including paying the so-called "nanny taxes". Allan Wernick an attorney and director of the City University of New York's Citizenship Now! Project, recently wrote an article in the Daily News about tax compliance for non-U.S. citizens and their employers. This includes immigrant nannies!
How Do I Know If I Must File Taxes For My Household Employee?
Under most circumstances, any person employing a household employee is required to give their worker a W-2 form before January 31st following the calendar year if they paid $1800 or more in 2013. Household employees working in 2013 should already have their W-2 forms, which they need to file their own tax returns. A household employee is defined as a worker who performs services for you in your private home that you have the right to direct and schedule. As their employer, you maintain the right to control the worker's schedule and duties.
What If My Employee Is Not A U.S. Citizen?
Workers, documented and undocumented, are legally required to report income and pay income taxes when required. That's true even if they are working “off-the-books,” and their employer pays in cash. If you are working for any employer who deducts taxes from your pay, you may be due a refund even if you are undocumented. It is important to understand that all proposals for 'amnesty' for today's undocumented workers hinge on the workers' compliance with income tax and other US laws prior to their application for a change in status.
How Do I File Taxes Without A Social Security Number?
If an undocumented worker does not have a social security number, you can file a tax return using an Individual Taxpayer Identification Number (ITIN). You can obtain an ITIN by including IRS form W-7 the first time you file a tax return.
What Benefits Can A Permanent Resident Expect By Being Tax Compliant?
Permanent residents have a particularly good reason for complying with Federal and State tax laws. If a permanent resident applies for U.S. citizenship, the U.S. Citizenship and Immigration Services will ask you for proof of tax filings, says Wernick. You can naturalize without showing proof of tax filings only if you earned so little that the law didn't require you to file a return.
What About Employees That Hold A G-5 Visa?
Foreign diplomats and foreign staff members of the United Nations and other "Non-Governmental Organizations" associated with the UN are permitted under US law, as a courtesy, to bring their foreign domestic service workers to work in the United States. These foreign domestic service workers are employed as nannies, maids, housekeepers and senior caregivers. The US State Department imposes strict rules that the foreign diplomat must agree to, contractually, with the domestic worker that governs their employment in the United States as part of the visa application and issuance. Our free G-5 Domestic Quick Start Guide will ensure that you have all the tools necessary to become tax compliant.
For more information on how to pay your household employee legally, download our free Household Payroll Guide.
Moving your family can be one of life's most exciting times, yet also one of the most stressful times. Finding a new place, selling an old place, leaving a job, starting a new one or transferring within a company, packing, unpacking, leaving an old nanny, hiring a new one, (or sometimes the nanny moves or commutes to the new location if it’s a local move) the list can seem like its endless.
If you are moving, don’t forget about your nanny taxes. It’s more complicated than you may think and that is what we are here for. Helping you navigate your way in the payroll tax waters, it’s what we do.
You need to let us know your new address and when the move date.
We have state specific tips sheets that are designed for a quick reference so that you know the new rules in your new location. It’s one of my favorite tools we offer our clients, and they are free!
Things to think about when you (or even your employee) moves:
- Let us know as soon as the move occurs. Waiting until the end of year can cause unnecessary tax return changes, late fees and penalties.
- Unemployment is paid to the state where the work happens. If you move state to state, we will close the old unemployment account and open a new one in the new state.
- If you move during a quarter, you may have payments and reports due to 2 states.
- If you are withholding state income taxes for your employee, the old account will need to be closed and a new account opened, when applicable.
A Client Example:
Jody Smith has 2 caregivers to help her with her disabled child. She decided to move from one state to another to have access to a medical facility to work with her child. Jody’s plate is a very full one. The 2 caregivers moved with the family (amazing, I know). When she called to notify us of the move all she had to give us was her new address and the date she moved. We calculated the new paycheck amounts for her employees as she was happy to continue writing the weekly paychecks herself. We coordinated opening new accounts and closing old ones. We collected her tax funds and paid and made the necessary tax filings.
When it was all said and done, Jody sent an email thanking us for making her life easier during this transitional time. My reply back is Jody, it’s what we do and it is our pleasure to lighten your load!
About the Author:Mary Crowe, FPC is HWS' Client Support and Quality Assurance Team Lead. Mary joined our team in 2011, and assumed these responsibilities in October 2012. Mary's focus is client support and internal Information Technology support, her core competencies. She brings 15 years of successful client services experience, along with strong team building and problem solving skills, to our team.
A client calls and say "I want to pay my nanny $16.00 an hour take home, can you help me?" When I hear this question it is like nails on a chalk board; however it’s also a great opportunity for me to explain the nanny taxes, how payroll works and why paying a net per hour is the worst idea. This is often referred to as 'Grossing Up' a paycheck and can lead to major headaches.
Why do I think it's the worst idea ever? The answer is simple. When an employer pays net, they lose sight of the Gross amount and what it really means. I have taken many calls from clients who didn’t understand the taxes would be so high in a gross up situation. I am also asked about the employee's income tax refund - they want to know how they get the money back. Getting the money back is out of the question, it's the nanny's paycheck. The money between the Gross and Net are theoretically 'withheld' from the employee's check and the employer sends in the funds to the taxing authorities. It’s her money and part of her check.
Lets take a look at the Fitz Family as an example. They live in Maryland and want to pay their nanny $16.00 NET per hour. She works 40 hours a week and is Single with 1 withholding allowance (also known as an exemption). That is really means is……
Social Security/Medicare Only
Social Security/Medicare and Federal Income Tax
Social Security/Medicare and Federal & State Income Taxes
Federal Income Tax
State Income Tax
As you can see from the above chart, depending on what you agree to 'withhold' or cover in the gross up, you are really paying a little over $17 an hour to just under $22 an hour.
You can find yourself in a position of needing to renegotiate with your employee because you didn’t realize that it really meant. Which is exactly what Mr. Fitz had to do after he called in thinking there was an error made in the calculations. First, Mrs. Fitz called in and started to cry that there were not expecting to have so much in taxes to pay. Then Mr. Fitz called to get a better understanding of why the nanny taxes ‘were so high’.
After Mr. and Mrs. Fitz had a better understanding of what it really meant, they talked to their nanny and mutually agreed to adjust the paycheck going forward to an amount that made everyone happy and was manageable.
I also speak to very unhappy nannies whose employer grossed up just to cover the Social Security and Medicare taxes, yet they failed to grasp that the nanny would still owe income taxes. The term 'tax' can be used very loosely in the conversations and what Family A meant was not what the nanny heard. A nanny who gets their W2 form and finds they owe $1200, $1500 or more in income taxes - 2 or 3 weeks of their take home pay - is never happy!
My advice to any employer when this topic comes up, it to use that 'I want my take home to be ____' as a starting point. Do the math. Let HomeWork Solutions help you with this. See what you can afford and still get the employee close to what they are looking for. And write your contract based on the gross hourly wage and not the net. Each year the tax tables change, so locking in to a net amount could cost you more next year when the taxes go up.
If you have little ones, you may appreciate this analogy. Think of payroll and nanny taxes like a sliding board. The gross is at the top of the slide, the taxes are in the middle and the net at the bottom. How many times have to you told your kids, “slides are for going down not up”. So I’m saying it, Payroll taxes are for going down not up!”
Feel free to try our Nanny Payroll Tax Calculator, which will allow you to calculate your nanny's wages and taxes before distributing payroll.
About the Author: Mary Crowe, FPC is HWS' Client Support and Quality Assurance Team Lead. Mary joined our team in 2011, and assumed these responsibilities in October 2012. Mary's focus is client support and internal Information Technology support, her core competencies. She brings 15 years of successful client services experience, along with strong team building and problem solving skills, to our team.
are not forever, and the reasons for letting your child's caregiver go vary. Often, the children grow up and your beloved family nanny
is no longer needed. Perhaps the nanny has horrible work habits - always late or a frequent 'no show.' Your family and the nanny simply may not 'click.' The nanny who was a wonderful nurturer of your infant does not have the energy to deal with your demanding toddler. Whatever the reason, firing a nanny can be an uncomfortable experience for both family and nanny.
Below are some tips and best practices when letting the nanny go.
The golden rule is in full force here. So long as the nanny is not being fired for willful disregard for the work agreement (absenteeism, failure to follow household rules), consider that this news is going to come as a blow to the nanny. It is best to break the news at the end of a work day and away from the children.
Don't draw out the conversation: Short and simple are the best way to deliver the news
. Nanny may react emotionally - tears, harsh words, or stunned shock. Don't let yourself become engaged. Use "I" statements ("I am convinced we cannot make this work.") instead of "You" statements ("You caused this to happen because you never [fill in the blank].") If the parting is amicable, assure her of the actions you are willing to take - provide a reference, pay severance, post a Nanny Available notice at your workplace, or the like. If unpleasant, don't rehash the offenses.
: If you have a written work agreement, you will most likely have a notice provision already agreed to. Adhere to it. If you require a certain amount of weeks of notice from the nanny
, be sure to return the courtesy, or provide pay in lieu of the notice.
Sometimes the nanny is being fired for gross negligence or willful disregard for the terms/conditions of employment. In these cases, you have to use your best judgment (try not to be overly emotional) and AT A MINIMUM provide pay at the time of dismissal for all work performed to date. NEVER fail to pay the nanny, no matter how horrible, for the work performed. You could open your family to a world of trouble with your state's Wage and Hour Board
should the nanny (who probably doesn't like YOU too much at this time either) files a dispute for unpaid wages.
This is truly decided on an individual case basis. A family relocating out of the area for example may provide "notice" when the "For Sale" sign goes up in front of the house. They may consider offering severance - perhaps 2 weeks pay - if the nanny stays with the family until the move date. This type of severance is also known as a retention bonus. This helps insure the family against dealing with relocation and job issues and having the nanny leave prematurely because she, naturally, is most concerned with her own continuity of income.
Letter of Recommendation:
When you are separating on amicable terms, please consider writing a letter of recommendation, and making yourself reasonably available for telephoned reference checks.
When your nanny is in violation of your work agreement and it DOES NOT endanger the children, providing nanny a written warning that documents the behavior, restates the work agreement, and advises that future offenses may result in termination can protect you from unemployment claims that adversely impact your tax
rate. Make sure you have two copies, nanny signs one and gives it back to you. This is common for tardiness, absenteeism, etc. Keep daily time records (you should anyway for myriad reasons) so you can demonstrate, if needed, the dates and nature of the problem. If the nanny's offense endangers your children - forget the paperwork and let her go immediately. Write down as many specifics that day as possible so you have a contemporaneous record to back up your protest of an unemployment compensation claim.
You nanny may be eligible for unemployment compensation from your state fund. This is true even if you were not properly reporting her wages
to the state! Presuming you have your employment taxes in order, your responsibility is to respond to the state's inquiry about the terms of dismissal in a timely basis. Failure to respond on time will result in a ruling on the nanny's behalf. If the nanny is awarded benefits, the charges are applied to your account in much the same way an at-fault auto accident is applied to your auto insurance. The total amount of the benefits paid will be part of your tax rate calculation in future years - you have no out of pocket obligation.
But what if you were paying under the table? The state unemployment agency will look back at the last one - two years of the nanny's employment. If you did not report/pay your unemployment taxes
, you will be subject to administrative action, including reporting to the IRS, and may be charged with the entirety of the nanny's unemployment benefits
. Unemployment insurance (tax) for the full time nanny averages $300- 400 a year - when paid on time. A nanny's benefits may be $200 - 300 per week for up to 39 weeks. That could be $8000- 12000 directly charged to you for failure to pay the requisite employment taxes.
Security & Family Property:
Request that nanny at the time of separation return all house and car keys, as well as any remote devices. Consider changing the alarm or garage door codes if the separation is not amicable. Notify school and medical personnel that the nanny is no longer authorized for pickups, etc. If the nanny had a family credit card for groceries and the like, cancel that card too. Car seats, if provided for the nanny's car, should be returned then too.
What about the live in nanny?
Family options here vary. For even the most egregious offenses, the nanny needs to sleep some place tonight. Consider getting her a room at a nearby Motel-6 and driving her there with her possessions. If the nanny didn't meet your expectations, consider giving her a bus ticket or plane fare back to family. Make sure you have a forwarding address for the nanny so you can provide her W-2 form at year end.
Telling the children:
You will need to explain to your child that the nanny is leaving separately. If the separation is amicable, you will want to allow the nanny and the child to say their good-byes and share their last moments. Be careful that it doesn't turn into a melodrama. Consider planning a future visit if possible - perhaps you can arrange for nanny to baby-sit one evening a few weeks down the road.
The nanny who was fired for unacceptable job performance should not be left alone with your child, and probably should not engage in good-byes. Take a deep breath and try to calm yourself before you talk to your child. Let your child know why the nanny was fired-if possible- and if the child is old enough to comprehend. Keep it positive to the extent possible. "Suzie was a lot of fun but she knows you need to be strapped in your car seat to keep you safe and she broke the rules. Daddy and I need to keep you safe and we cannot let Suzie stay with you anymore." is far better than "I just fired Suzie and she won't be watching you any more. I cannot believe she put you in the car without your car seat. That was a terrible thing to do! She is a horrible nanny!"
Your child may have become attached to the nanny who let her sit in the front seat of your car without a seatbelt. Be prepared for your child to be angry with you for a while too. Reinforce to your child (and the fired nanny) that your number one job as a parent is to keep your children safe. This will pass, and months from now the child may not even remember who that nanny was - honestly!
The Internal Revenue Service issued new 2014 income tax withholding schedules and they are fully integrated with our online tax calculator now. We are fielding a lot of inquiries about new paycheck amounts and will try to address the common questions here:
Q. Why did my nanny's paycheck go up a bit? I don't remember any tax cuts.
A. Tax tables are adjusted annually with a formula that accounts for inflation. The amount of the standard deduction increased, meaning the wage subject to income tax decreased at bit. Most people will not note a change of more than a dollar a week unless there has been a change to marital status or number of exemptions.
Q. Are there any changes I should note when calculating my household employee's paycheck?
A. It is a best practice to have your employee complete a new form W-4 on an annual basis. This is your employee's instruction to you on how to calculate his/her withholding. For employees who have a valid same-sex marriage, no matter where they live, they must now claim the filing status of Married. We discussed this in an earlier post in detail when the IRS announced changes after the courts invalidated the Defense of Marriage Act (DOMA).
Q. My paycheck today covers the last week of December. How do I calculate the taxes?
A. Income is taxed according to the rule of constructive receipt. The period covered doesn't matter, it is the date of the paycheck. If your paycheck is dated January 3, 2014 it is taxed at 2014 tax rates and will be reported on your 2014 income taxes.
Q. I need my Form W-2 so I can file for my income tax refund. It is January 4, when will I have it?
A. We are busily doing annual reconciliations on employer accounts. We expect to complete pushing W-2 forms out to the online platforms no later than January 15. If your employer pays you directly and uses HWS simply for tax work, we are depended on when the employer tells us the details of your quarterly wages. W-2 forms are available within 7 days of a completed report of quarterly wages paid.
Employees whose employers subscribe to our premium service have 24/7 online account access - however online accounts require that you be pre-enrolled. The employee self-service enrollment completes the next business day!
Q. I am worried I am going to owe money with my taxes (or my refund is too big and I need more money in my paycheck). What do I do?
A. Workers should review their withholding every year and if necessary, fill out a new Form W-4 and submit it to their employer.
Inclement weather, train derailments, flight delays- these are all potential situations that could keep a person from their child or elderly relative. But other emergency situations exist- your charge could develop a high fever, knock a pot of boiling water from the stove, develop an allergic reaction that prevents them from breathing - that requires a nanny or senior caregiver to react quickly and make the right choice in getting medical attention.
Emergencies happen all the time, but if you're prepared, it could make a huge difference in the outcome of the situation.
According to the American Academy of Pediatrics (AAP), an emergency exists if you think a child could die or suffer permanent harm unless care is received right away. Your charge may need care before emergency medical service personnel arrive. And being prepared can assure the child isn't further harmed by doing the wrong thing. Many caregivers feel they are prepared for emergencies because they know when and how to call 9-1-1. Sadly, this isn't always enough.
The AAP offers the following 10 tips to organize an emergency preparedness plan for a nanny or senior caregiver:
CHECK IF 9-1-1 IS THE RIGHT NUMBER TO CALL. Some areas of the country do not have 9-1-1. Others have E-9-1- 1 where your address is automatically stored in a database. Make sure you know what's available where you or your elderly relative live.
KEEP A WELL-STOCKED FIRST-AID KIT ON HAND. From minor cuts and bruises to sunburn and sprains, a good first-aid kit is a great first line of defense. To learn what makes a good first-aid kit, contact your health care provider, local pharmacy or the American Red Cross.
Consider putting together an emergency food kit also, with enough food and water for all for three days. It's not just terrorism; disasters such as Hurricane Katrina, tornados and earthquakes happen too!
MAKE A LIST OF EMERGENCY PHONE NUMBERS. Write down the numbers you need that is easy to access at all times. Make sure you include back-up family members in case something happens to the primary caregivers.
Consider if something happened to you, the caregiver? Does your boss know who to contact if you're unable to?
TEACH YOUR CHARGES WHO TO CALL AND WHAT TO SAY. Does your elderly relative have the capacity to call for help? Can your charge now phone Mommy or Daddy at work? Once the child learns to use and speak into the telephone, teach them about 9-1-1. Make sure older children know where the phone numbers are for emergency help and poison control. Roll play with the child. If they call 9-1-1, the operator will ask, "Fire, Police or Ambulance/Rescue?" Tell your child to stay on the line while the call is transferred. When the appropriate agency picks up, the emergency operator will ask for name, address, telephone number and details. He or she will want to know what has happened, when it happened, where it happened and who is involved. Teach your child not to hang up unless told to do so. The emergency operator may be able to offer help over the phone.
TIP: Unblock your caller ID. Make sure the child knows their street address, and apartment or unit number if appropriate.
MAKE SURE YOUR HOUSE NUMBER IS VISIBLE FROM THE STREET. Make it easy for police, fire officials or emergency medical personnel to find your house. Inspect your family's home from the street. Are there large house numbers in a highly visible area? Are the numbers are well-lit, able to be seen at night? Can they be seen from the street in either direction? Share this article with them and encourage them to correct the problem.
KEEP A CLEAR AND UP-TO-DATE RECORD OF IMMUNIZATIONS AND SURGERIES. This can help doctors do a better job of diagnosing a problem in an emergency. For example, if your senior relative has had recent surgery and in a rehabilitation program, it should be well documented. Or, if child has a bad infection, and the doctor knows your child has been vaccinated against Hepatitis, the doctor can rule that out. This can save time. Ask the family for the current immunization records of any child in your care (or a list of medications your senior charge is taking) and keep it with other emergency medical forms.
WRITE DOWN MEDICAL CONDITIONS, MEDICATIONS AND DOSAGES. Develop an emergency plan to hold all important information, including numbers and medical history. Being prepared in advance can help assure proper treatment and prevent serious drug interactions.
MAKE A LIST OF ALLERGIES AND REACTIONS. It will help ensure that health care professionals don't use medicines that can hurt your child. And, it might help emergency medical personnel find a reason for problems such as seizures or shortness of breath. If your children or elderly relative have severe drug allergies or chronic conditions, we recommend they wear Medical I.D. bracelets.
IF YOU HAVE HEALTH INSURANCE, CHECK YOUR EMERGENCY COVERAGE. Check your charge's policy in advance. Some insurance companies require that you call first for approval. Make sure you understand the policy, and carry all necessary cards and phone numbers with you. The direct caregivers of your charge can request additional cards for you, or you may photocopy their cards and retain with other emergency medical information.
TAKE FIRST-AID CLASSES. A basic class will teach CPR and proper ways to treat burns, wrap sprains, apply splints and perform the Heimlich maneuver. Remember, if you take time now, you won't lose precious time when your charge's life could depend on it. Research when your local hospital or Red Cross will be holding CPR and First Aid training. Your pediatrician, local hospital, fire department and local chapter of the Red Cross can tell you about classes. Consider asking your charge's family to pay for the class - they should be delighted to!
In 2014, the Household Employee Wage threshold increased to $1900. This means that any household employee- such as a nanny, housekeeper or elder care worker- earning $1900 or more per year requires their employer to pay what is commonly referred to as the "nanny tax."
Back in 1995, Congress updated tax and reporting thresholds for household employers and made provisions for annual adjustment of the wage threshold that obligates "nanny tax" reporting to keep pace with economic changes.
In 2013, household employers were required to report wages paid to all household employees who are paid $1800 or more. Household employers must pay Social Security and Medicare taxes for all household workers who meet this wage test, and issue a form W-2 at year end. The 2011 wage threshold was $1700.
The obligation to pay federal and state unemployment taxes use a different determination to mandate tax reporting that is based on wages paid in a calendar quarter. Federal unemployment taxes are due when wages paid to all household workers (whether they meet the Social Security wage test or not) in a calendar quarter are $1000 or more. State thresholds range from $500 - $1000 of total wages paid in a calendar quarter.
Household employees include nannies, housekeepers, maids, elder care givers, home healthcare aides and other individuals providing personal services in a private home. The IRS and the Department of Labor entered into an information sharing agreement in 2011 as part of an increased enforcement aimed at employers who misclassify employees such as nannies as independent contractors. When identified, the employers will be subject to civil and criminal penalties, as well as back tax collection activities. The recession has placed state unemployment funds under considerable stress and enforcement and back tax collection activities are a natural consequence as the government attempts to maximize tax revenues collected.
There are more than 2 million senior caregivers working in private homes to help our aging loved ones to 'age in place.' These caregivers are employees. They are either employed by the home health agency who hires, schedules and pays the senior caregiver, OR they are the employee of the senior or their family who pay the caregiver directly.
How do you know if your aging family member has household employment tax obligations for their senior caregiver?
Was the senior caregiver hired through an agency? Look through the agency paperwork. A senior care staffing agency who employs their caregivers will proudly advise you that they are paying the payroll taxes, workers compensation insurance and handling the reporting formalities of payroll.
Can't find evidence in the agency paperwork that they are employing their caregivers? Guess what? They probably are not then. There are senior care registries who function strictly as referral agents, connecting clients to home care workers and then collecting a placement or finder's fee for their service. Once the senior caregiver has been placed, the registry is no longer involved in the relationship, which means that the senior or family paying for services is the employer and therefore responsible for paying household employment taxes.
Note that some registries will facilitate the payment transfer between the senior/family and the caregivers, most particularly when private long-term care insurance is involved. This bookkeeping function does NOT make the registry an employer, and if you question them directly they will emphatically affirm this.
If the caregiver is not employed by a senior care agency, you must then determine whether your senior/family paid the senior caregiver enough money to trigger an employment tax obligation. Social Security and Medicare taxes are due if the caregiver was paid $1900 or more in a year. State and federal unemployment taxes will be due if the caregiver was paid $1000 or more in a calendar quarter (and in some states as little as $500 in a quarter).
Our Household Payroll Quick Start Guide is full of helpful information to help you organize your senior's payroll records and move into compliance with household employment tax rules. Our staff welcomes your calls and questions also - we work with families nationwide who what to simplify and streamline this entire process. Call us at 800.636.4829 and you will be pleasantly surprised how easily you can outsource the paperwork and tax filings to a firm that is expert in the area. Do you work with a CPA? Accountants nationwide refer clients to HWS, secure in the knowledge you will be well cared for and that their work will be easier when they assist with your tax filings.