Summer is coming. I count the days until I can wear flip flops, have some daylight at the end of my work day, and am already day dreaming about a summer vacation. Most of us anticipate summer. Many nannies, however, dread the coming summer months. Why?
Topics: nanny summer schedule, nanny paid time off, nanny work agreement, nanny vacation
Note: Special thanks to our guest blogger, Bob King, for his discussion below on nanny employment termination and the return of family property. Bob is an attorney and founder of Legally Nanny, the leading law firm providing legal and tax advice to household employers.
Topics: nanny return of family property, nanny employment termination, nanny separation
Many families (and agencies) use nanny work agreements that cover a specific period of time, generally one year. This is NOT a good idea. In a complicated United States District Court, D. Oregon case, the court affirmed that nannies are indeed non-exempt employees and are entitled to hourly pay and overtime pay for hours worked in excess of 40 in a work week.
Topics: nanny employee, nanny non-exempt employee
“Most workers [who are classified as independent contractors] are employees under the FLSA’s broad definitions.” ~ David Weil, Administrator, US Department of Labor Wage and Hour
Nannies and senior home caregivers are almost always employees of the hiring family, yet every year thousands of families classify their nanny or senior caregiver as an "independent contractor" and fail to pay the employment taxes and unemployment taxes on the wage they pay their family's nanny.The IRS estimates that fewer than one in five famlies with a household employee comply with the payroll, tax, and reporting requirements in the tax code. Industry experts place the compliance rate much lower than 20%, and have calculated a $3 BILLION dollar per year tax gap - the taxes owed but not collected on household senior homecare and nanny employment.
Topics: worker misclassification independent contractor, nanny employee, nanny independent contractor
For a married nanny earning $18,000 a year, her Federal income tax withholding could have doubled. If she earns $22,000 it could go up by a third!
Topics: nanny income tax
Topics: nanny e-verify
In today's economy nannies are finding that good jobs take longer to secure. The household who let's their off-the-books nanny go, for whatever reason, should be seriously concerned about their former nanny filing an unemployment claim. The nanny who was perfectly content to receive tax fee income experiences a reality check when they have no income for weeks, or months. Suddenly, filing an unemployment claim seems the only option to avoid eviction or to put food on the table. Once that claim has been filed, the whistle is blown on the former household employer. Since state unemployment systems share this information with the IRS, everyone is on notice that the family employed the nanny and that there are no tax returns on file.
Topics: nanny tax audit
The IRS's 2010 budget request includes an increase of approximately $300 million above its 2009 appropriations for enforcement. Conventional wisdom says that IRS compliance activities recoup $5 for every $1 spent. Historically, IRS enforcement efforts step up in times of budgetary crisis. The efforts target closing the "tax gap" - the difference between taxes owed and taxes paid. The "nanny tax gap" is estimated to be more than $5 billion per year and possibly as much as $20B.
Topics: payroll tax enforcement
If a nanny is married and both spouses work and both spouses had their withholding tax adjusted, they are being credited for 150% of the available credit - and may be surprised to owe several hundred dollars at the end of the year. If you work two or more jobs and have withholding from each, you may be being under-withheld because each job treats your withholding tax calculation as if you are working only for them. Nannies in a nanny share have to be particularly vigilant that both jobs are taking into account your TOTAL income, not just the portion they pay individually, when calculating your withholding.
Topics: nanny income tax
Mary I. Miller and her husband, Walter Randall Miller, pled guilty on March 24, 2003 to one count each of conspiring to defraud the United States by failing to file employment-tax returns or pay employment taxes from 1994 to 2002. The couple were both sentenced to five years of probation, conditioned on their agreement to a restitution agreement with the IRS.
Topics: payroll tax enforcement
