Our client, John M. came to us after working with a nanny that he thought could work as an independent contractor.
California has some of the most complex household employment labor laws in the country! So complicated in fact that the California Household Employers Guide, published by the state, runs 70 pages of explanation, and that is just for the taxation component!
For employers, managing payroll smoothly and properly is a delicate, critical matter. There may be no quicker way to turn a happy employee into a disgruntled one than by mishandling his or her paycheck (exactly why many household employers use us).
This year, employers have an additional challenge with which to contend. When Congress passed, and the President signed into law, the Tax Cuts and Jobs Act (TCJA) late last year, it meant the IRS withholding tables would have to be updated. And now they have been.
Employers must exert a certain amount of time and resources to properly retain their income tax records. But these aren’t the only documents you need to maintain. Retention of your organization’s payroll records is also important. This goes for both corporate and household employment.
Finding the perfect nanny to work with your family is an exciting and rewarding experience. Once you’ve found the person that you want to hire, you’ll need to verify your nanny’s work eligibility and be sure that she can work legally in the United States.
Under the Tax Cuts and Jobs Act (TCJA), individual income tax rates generally go down for 2018 through 2025. But that doesn’t necessarily mean your income tax liability will go down. The TCJA also makes a lot of changes to tax breaks for individuals, reducing or eliminating some while expanding others. The total impact of all of these changes is what will ultimately determine whether you see reduced taxes. One interrelated group of changes affecting many taxpayers are those to personal exemptions, standard deductions and the child credit.
If you itemize your deductions when you’re filing taxes, you may be able to deduct certain expenses that were paid to your in-home caregiver. If you are trying to determine what portion of in-home caregiver expenses can be deducted, there are several stipulations that you should know about. As always, do consult a qualified personal income tax preparer to help with the details.
If you’re considering hiring a nanny and you’re determining how much you want to pay, you should also factor in the cost of hiring a nanny payroll service that will have your back. A partner to help make sure you have everything covered in terms of payroll, taxes, and benefits. By hiring a nanny payroll service that you can trust, you’ll have peace of mind that hardworking payroll specialists are working to make sure you have everything in order the first time, so there are no surprises when it comes to tax time.
Every year there are a host of changes to labor law and reimbursement rates that impact nanny household payroll. Below please find a quick overview of the significant changes that go into effect in 2018.