Do you hire, manage and issue payroll to a beneficiary’s caregiver(s) in your capacity as a trustee? If so it is important to understand the legal and tax obligations this type of employment creates for both the trust and you personally.

Understanding the Household Employer's Role with Unemployment

The work agreement (sometimes called a contract) you negotiate with your nanny, housekeeper, or elder care provider sets the professional tone of the work relationship right from the start. A carefully thought out work agreement will help the employer avoid future problems and misunderstandings with the employee.

Monday, September 1 is Labor Day in the U.S. - a Federal holiday that many nannies and caregivers receive as a paid holiday. Families often struggle with how to calculate the employee's paycheck, especially overtime pay,  when a paid holiday is in the pay period.

HWS has been providing Nanny Tax compliance services since 1993. Did you know, in a recent client survey, the biggest motivation for employers in outsourcing nanny tax compliance is the time saved?

How much time an individual would spend on their nanny taxes will of course vary between individuals. The IRS estimates that record-keeping, keeping familiar with the law, and tax return completion can run 60 hours per year. Record-keeping accounts for the lions share of the time, an activity that needs to be done every payroll period.

I was chatting with a client today. This gentleman has used our services for many years, and his household circumstances are changing. In the course of the conversation, I asked him what factors caused him to continue using our services year after year. He answered without hesitation "The time savings!" He went on to state that he actually spends only about one hour a year on his nanny taxes - primarily in collecting his information and responding to our quarterly requests for wage reports. (This client is a NaniTax Plus subscriber.) He was certain that he had never filed a tax return on time before hiring HomeWork Solutions, and that the savings in late fees alone was more than our fee. I suspect some exaggeration, but not much!

The CPA or accounting professional is often the first resource a family consults when hiring a nanny or senior caregiver. Families have questions about their tax responsibilities and the myriad rules and responsibilities that surround their new role as a household employer. You of course are knowledgeable about household employment taxes (the so-called “nanny taxes”) and have probably assisted many families to report and pay these taxes as part of your personal income tax practice.   While you and the family can of course refer to IRS Publication 926 for specifics about Federal household employment tax reporting, your experience tells you this is not the end of the story.

By Dr. Lindsay Heller, Psy. D. 

Massachusetts’ Domestic Workers’ Bill of Rights (DWBR), S.2132, passed the MA Senate on May 8, the MA State House on June 18, and signed into law by  Gov. Duval Patrick on July 2, 2014. The bill goes into effect April 2015.

I spoke to a prospective client today on the phone. She just hired a senior caregiver - a woman she calls "Mom's helper" - to come in daily to assist her mother around the house. Her mother has had a series of falls recently, none serious, and needs basic help and companionship at home during the day while her daughter is working. As a sandwich generation daughter of a mother with similar issues with aging, I completely understood why she took this step and the challenges she faces trying to balance her Mom's needs and her own professional and economic needs.

The Bracamonte family and their former "nanny" Diane Stretton put the term "Nightmare Nanny" into our vocabulary this summer. The Bracamonte family "hired" Ms. Stretton to care for their children in exchange for room and board, and when the relationship fell apart Stretton refused to move out. That is when the Bracamonte's nightmare nanny story began.