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3 Tools to Help With Nanny Taxes and Employment Compliance

Posted by HomeWork Solutions on 10/12/17 9:00 AM
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Nannies and other household employees are an essential part of many lives, providing comfort, care, and essential duties in your home. Keeping their employment compliant with state and federal laws can be complex and confusing, even to the most discerning of employers.

As a household employer, you are responsible for collecting payroll taxes such as Social Security and Medicare from your employees, not to mention paying their wages properly and on time. But before you start feeling overwhelmed by everything you have to take care of, we have a few tools to share that make preparing this information far simpler.

1. Paycheck Calculator

Even if an employee worked “under the table” a decade ago, those taxes still must be paid. No statute of limitation exists on nanny taxes. The IRS can levy penalties and past-due interest on any back tax payments and unemployment insurance payments. 

Luckily, our paycheck calculator can simplify the process and allow for individual customization. You can find out how much to withhold for federal and state taxes, as well as the total employer obligation, which can often vary.

2. Minimum Wage Calculator

Household employees must be paid a rate that corresponds to your state’s minimum wage requirements.

If your state has a higher minimum wage than the federal minimum wage, the state rate takes precedence. Calculate the minimum wage to pay your employee using our handy calculator, so you can easily stay compliant with FLSA standards without the worries.

Just remember that most household employees do not qualify for 1099 independent contractor status. This means you can’t place the burden of meeting certain requirements and collecting certain taxes onto the household workers themselves.

3. Hourly Pay Calculator

Almost all household employees are considered non-exempt under U.S. law, and must be paid hourly and overtime rates.

If collecting this information sounds daunting, use our hourly pay rate calculator. It converts what would be an annual salary into an hourly wage for the explicit purpose of creating a work agreement in compliance with federal labor laws.

California residents have some additional points to bear in mind. The state has declared a standard workday to be eight hours long, so any hourly employee’s shift that extends beyond that time is subject to overtime rates. Overtime starts at 8+ hours per day, not 40+ hours per week. California’s requirements are generally more stringent than many federal standards, and impose a significant number of duties, responsibilities, and reporting on the employer. You can find out more from the state’s Employment Development Department’s handbook.

Hire a Helping Hand

Sometimes you need more than just the tools. Sometimes you need an expert, too.

Hiring a company that specializes in nanny tax and payroll compliance can be a worthwhile decision that allows you to relax safe in the knowledge that your household employee taxes are being prepared correctly. At HomeWork Solutions, our experience with labor laws, payroll requirements, reporting, and requisite taxes can save you not only time, but also potentially hefty fines. Being ignorant of labor laws does not waive your responsibility to uphold them.

With a trusted team on your side, you can make sure that both you and your household employees are well protected without any of the hassle. Contact HomeWork Solutions today to speak to our knowledgeable team about your service options.

Topics: nanny tax, CPA, employment compliance

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