Did you know that every paycheck's net or take home calculation will change in 2013? Calculate your nanny paycheck deductions before you issue any 2013 payroll.

Topics: nanny payroll tax, calculate nanny payroll tax, nanny tax calculator, nanny social security tax rate

December 21, 2012 3:47 PM

Topics: nanny payroll tax, calculate nanny payroll tax, household payroll tax, nanny tax calculator, nanny social security tax rate, household paycheck calculator

Nannies are employees of the families they work for. They are not independent contractors, whether the family or nanny wants to be or not.

Families sometimes try to completely side step their employment tax obligations by giving the nanny a 1099 form at year end. In so doing, they avoid paying their share of Social Security and Medicare taxes, as well as unemployment taxes, and they push their tax obligations on to the nanny. This path allows the family the benefit of child care tax credits without the corresponding expense of paying their portion of the employment taxes.

Topics: nanny w-2 form, domestic employer legal responsibilities, nanny independent contractor, household independent contractor

New York State Law requires all private employers to provide written notice to employees of their rate(s) of pay and designated pay day on an annual basis. Notice must be provided between January 1 and February 2 2013. NYS' FAQ on the Wage Theft Prevention Act specifically states that an employer may not choose another time of the year to provide the notice!

Topics: nanny payroll, domestic workers bill of rights, calculate nanny payroll tax, nanny employee, household payroll tax, new york household employment, nanny work agreement

Clients from time to will ask us for assistance helping their departing nanny locate a new position. Many post "Nanny Available" advertisements on neighborhood list servs and bulletin boards. We recently came across the following example and wanted to share. Names have been changed!

Topics: nanny reference check

HomeWork Solutions is teamed with National Crime Search (NCS) to offer true, credible pre-employment background screening for families directly hiring household workers such as nannies, housekeepers, and home care workers.

Topics: household employee background check, nanny background screening

Topics: domestic employer legal responsibilities, nanny non-exempt employee, nanny overtime

In the household staffing arena, it is very common for families to express their appreciation for valued service with an end of year monetary bonus. Household employers often have the following questions:

Topics: nanny payroll, nanny bonus, nanny wage

The IRS an increase to the standard mileage reimbursement rate to take effect January 1^st, 2013.  The new rate increased from 55.5¢ (2012) to 56.5¢. For compliant household employers preparing to give their nannies a W-2 this tax season, this is imperative information.

Topics: nanny expense reimbursement, household employee expense reimbursement, nanny payroll, nanny mileage reimbursement

Q. Does my nanny expect a bonus? If so, how big should the bonus be?

A. Holiday or year end bonuses are OPTIONAL - and are reportedly paid by about half of our clients. So, where as your nanny might appreciate a bonus, unless it has been your practice to give one in the past she is not likely to EXPECT it. Bonus amounts are typically one, sometimes two weeks pay. For newer nannies, most families fall back on the one day for every month of employment, up to a week. So the nanny who started in October might get 3 days pay as her bonus.

Many families have employment contracts that obligate a bonus at the employment anniversary date - a retention bonus. When these arrangements are in place, there is often either no holiday bonus or a very modest one.

Q. My husband and I have not had raises in two years, and we went ahead and gave our nanny a salary increase on her employment anniversary date. We would like to give a bonus, but it cannot be as generous as last year. Is this a problem?

A. Your nanny hears the news and knows that economic conditions are not fabulous too. Most employees, not simply nannies, have adjusted their expectations downward, and most are happy to get any bonus. I recommend that you acknowledge this to your nanny. Something to the effect "Times are rough, and I wish this bonus could be as generous as last year's." Make sure you use the words to express your gratitude for the services your nanny provides; most professional nannies would agree that a financial bonus is nice, but the words sincerely offered are always remembered.

Q. Are nanny holiday bonuses and gifts taxable?

A. Yes. In the eyes of the IRS, there is no such thing as a GIFT between and employer and an employee. Anything of value given by an employer to an employee is considered compensation, subject to wage reporting and employment and income taxes

The only way to skirt the issues of reporting the gift or bonus on the nanny's W-2 is to give her something with a 'de minimis' value - something so small that it is administratively impractical to perform a valuation and include it in compensation. This absolutely rules out CASH and dollar-value gift cards, but might allow other small expressions of gratitude such as a framed photo of the nanny with her charges.

The IRS does not define 'de minimis' by any specific value. A business gift is considered 'de minimis' if the value is less than $25. Many employers use the same measurement - hence the holiday ham or turkey. Gift cards with a dollar value or 'cash equivalent', however, even under $25, would be considered compensation.

Any cash you give to an employee at any time - whether it's a salary, bonus, or holiday gift - must be added to the employee's W-2 income. As a cash equivalent, a $50 gift certificate or gift card is $50 of taxable income.

Topics: nanny bonus