REMINDER: January 31st is the new deadline to file form W-3 with the SSA. A tax law enacted by Congress in December of 2015 includes a new requirement for employers this year. All employers are now required to file their 2016 Form W-3, with copies of Form W-2, with the Social Security Administration (SSA) by January 31, 2017. In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms to the federal government. This new law now makes the deadlines to [...]
If a taxpayer pays above a certain amount to a person that works in their home, they will owe the so-called "Nanny Tax." For 2017, the domestic employee coverage threshold, or the amount at which the "Nanny Tax" will kick in, is $2,000, which is the same as the 2016 threshold. If you pay the employee less than $2,000 in cash wages in 2016, none of the wages you pay the employee are Social Security and Medicare wages, and neither you nor your employee will owe Social Security or Medicare tax.
Traditionally, an employee who is paid a “salary” instead of an hourly wage is an “exempt” employee under the Federal Fair Labor Standards Act (FLSA), meaning that this employee is not eligible for overtime pay required by that law. Nannies, housekeepers and most domestic employees who work in your home do not qualify as “exempt”, meaning you must pay those employees at least the prevailing federal minimum hourly wage rate and one and one-half times their normal hourly rate for all hours worked in one week over 40 hours. So, can you legally pay your nanny a salary? The answer [...]
POST UPDATE: Since this was first posted on November 8th, at the end of November, a Texas federal judge granted a preliminary injunction against the new OT threshold level, so the new threshold did NOT go into effect on December 1st. While this did not go into effect it is still the law to pay your nanny overtime for any hours over 40 a week. Effective December 1, 2016, the Department of Labor (DOL)’s new regulations regarding when an employee may be considered “exempt” (not eligible for overtime) under the Fair Labor Standards Act (FLSA) take effect. These new regulations [...]
Is that nanny you just hired an employee or independent contractor? The answer has significant tax implications for both the family and nanny, because an employer is obligated to pay employment taxes for an employee, and may also have to provide workers compensation, unemployment or disability insurance for employees as well, but does not have to pay these taxes or benefits to independent contractors. Many nannies start work for a family with taxes the furthest thing from their mind. But then the nanny is surprised to receive a Form 1099-MISC from their family at the end of the year, instead [...]
Just after settling a similar lawsuit in California and Massachusetts for approximately $100 Million, Uber Technologies, the increasingly popular ride-sharing company, has been sued yet again, this time in a nationwide class action, that claims the company illegally classified drivers as independent contractors instead of as employees, and denied them overtime wages required to be paid to employees under the Fair Labor Standards Act (FLSA). Uber’s competing service, Lyft, has recently increased its settlement offer to $27 Million in a similar case, also filed in California. Household employers take note. Although nannies and other in-home help are almost never properly [...]
Childcare Workers Who Provide "Preschool" Instruction Are Not Exempt From Overtime Pay as "Teachers" The Federal Fair Labor Standards Act (FLSA) requires most workers, including nannies and other childcare providers, to be paid time and one-half for all hours over 40 they work in a week. Recently, a federal court ordered a childcare company to pay more than $92,000 in overtime pay and interest to its workers who worked more than 40 hours. In doing so, the court ruled that the FLSA exemption for teachers at elementary or secondary schools did not apply to daycare centers even if their employees [...]
Nannies who provide in-home care are almost always employees of the families who employ them, yet many families characterize their domestic employees as independent contractors incorrectly, either unknowingly or willfully, in order to avoid social security taxes or overtime pay rules of the federal Fair Labor Standards Act (FLSA). Over the last few years, the Wage and Hour Division of the US Department of Labor, the Division charged with enforcement of the FLSA, has increased its investigative focus on independent contractor mis-classification and nontraditional workplace structures, according to David Weil, administrator of the Wage and Hour Division since 2014. Household [...]
The US Citizenship and Immigration Service (USCIS) has announced that employers should continue to use the present Form I-9, the Employment Eligibility Verification form, even thought the Budget Office control number on that form shows an expiration date of March 31, 2016. USCIS stated that the old form remains effective until a new form is issued. All employers, including household employers of nannies and other domestic help, must complete a Form I-9 for newly hired employees to verify their identities and their right to work in the U.S.
If you hire a nanny or elder caregiver to care for your child or aging parent, you probably already know that the law generally considers this person your employee and you will need to withhold and pay the "Nanny Tax" for this person, which more specifically is social security and Medicare employment taxes. Caregivers are typically employees of the individuals for whom they provide services because they work in the homes of the family and the family has the right to tell the caregivers what needs to be done. But what if these services are provided by a family member? [...]