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

Household employers are not legally obligated to pay for ANY holidays or time off. It is true, however, that some baseline provision of paid holidays is a general expectation of household employees. Many nannies, especially those working without a written work agreement in place, worry about their income during the busy holiday season. Will they receive pay on holidays? Will they be paid for those regular days when they are not needed due to holiday travel or entertainment?

Topics: nanny paid time off, nanny benefits

Household employers in San Francisco California have local, city employment ordinances they must comply with, in addition the California Wage Order 15, California EDD taxation, and Federal tax and labor law.

Topics: california household employment

San Jose’s Measure D, which will increase the current city’s minimum wage from $8 to $10 per hour effective March 2013, passed with overwhelming voter support. 

San Jose is now one of the two cities in California whose minimum wage has gone up independently of the state's.  San Francisco has enforced its own minimum wage for many years.  There are only a handful of other cities nationwide that set their own minimum wages: Washington, D.C., Santa Fe and Albuquerque, N.M.

Household employers in San Jose whose pay their employees minimum wage need to adjust their salary to reflect this new rate in March 2013.

Stay tuned for more updates from The Nanny Tax Experts.

Topics: nanny income tax, nanny payroll tax, calculate nanny payroll tax, household payroll tax, california household employment

IRS and states recently affected by Hurricane Sandy will extend tax deadlines and waive some penalties to tax payers affected by this natural disaster.

Topics: nanny income tax, nanny payroll tax, nanny tax, household payroll tax, nanny tax compliance

Many people hear the words "nanny confidentiality agreement" and think this is something Brad and Angelina need - not their family!

Topics: nanny employment practices, nanny work agreement, nanny contract

Tax Commissioner Craig M. Burns has announced that Virginia will provide a penalty waiver to those individuals and businesses affected by Hurricane Sandy. This penalty waiver applies to any late returns filed or payments made by affected taxpayers between October 29, 2012 and November 9, 2012. To notify the Department of Taxation that you were affected by Hurricane Sandy, you must write “Hurricane Sandy” at the top of your return. The Department of Taxation will then abate any late-filing or late-payment penalties that would otherwise apply.

To qualify for this penalty waiver, taxpayers must be unable to meet their filing obligations because the financial books and records they need to file their taxes are unavailable because of hurricane damage or power outage.

Topics: nanny payroll tax, household payroll tax