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The Business Side of Being a Nanny

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1 The Business Side of Being a Nanny
Nannypalooza East November 3, 2018 © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

2 Disclaimer This presentation is not intended as specific tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should engage and consult your own tax, legal and accounting advisors to discuss your specific circumstances. © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

3 The Trusted leader in Payroll & Nanny Taxes since 1993!
Presenter: Jay Schulze, President © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

4 Agenda Worker Classification The “Nanny Tax” vs The Nanny’s Taxes
Fair & Legal Pay Contracts & Compensation Negotiating Points Hourly vs Salary Overtime Total Compensation Resources © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

5 Worker Classification
Am I an Employee or a Contractor? “The worker is your employee if you can control not only what work is done, but how it is done. If the worker is your employee, it does not matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.” -IRS Publication 926- Household Employer’s Tax Guide © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

6 The “Nanny Tax” Families are responsible for paying employment taxes and filing a Form W-2 annually if they meet the following: They have an employee They pay the individual $2,100 or more in calendar year 2018* The individual is 18 years or older, or household employment is the individual’s principal occupation The individual worker is not permitted to provide substitute workers without the prior approval of the family * State employment tax thresholds are between $500 - $1,000 paid in a calendar quarter. © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

7 The “Nanny Tax” When an employment situation exists, the employing family: Pays 7.65% of gross pay for Social Security and Medicare taxes Collects 7.65% of gross pay from the Nanny for Nanny’s share of Social Security and Medicare If the family fails to withhold this, they are legally liable to pay both parts of Social Security and Medicare to the IRS Pays BOTH Federal and State unemployment taxes. Pays for Workers’ Compensation & Disability Insurance where required. © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

8 The Nanny’s Taxes Federal Income Tax
FICA Tax (if employer chooses to withhold it) State Income Tax Local Income Tax © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

9 Fair & Legal Pay Why you should be paid “on the books”
It’s the law Unemployment Insurance Social Security & Medicare Workers Compensation Insurance Proof of Income (Paystubs & W2) Avoid Risk BECAUSE YOU DESERVE IT!!! © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

10 Fair & Legal Pay “I don’t want to report income and pay taxes. I don’t want to become ineligible for _________,”or, “I will be deported.” Failure to report your income is a felony offense. Commonly a household worker thinks they are agreeing to “under the table” income, then the family discovers they have reasons to declare the wages. Once those wages are declaed, Employees can be penalized for failure to report their own income and pay taxes. © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

11 Contracts & Compensation
ALWAYS HAVE A SIGNED CONTRACT Negotiating Points Scope of Work Hours of Work Compensation Benefits Healthcare? Retirement? Expense Reimbursement Confidentiality Agreement Termination Clause ALWAYS HAVE A SIGNED CONTRACT!!! © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

12 Contracts & Compensation
Overtime- Because you’ve earned it!!! Rules Vary By State Exemptions for Live-In Employees (Some States) Personal Attendants (Important in CA*) Personal attendant duties include feeding, bathing, dressing, and direct supervision of any person under care. Non-attendant duties include making beds, housecleaning, cooking, laundry, or other duties related to the maintenance of a private household or the premises. Being “On Call” Track your time! Free Resources Open Time Clock Clock It My Hours * © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

13 Contracts & Compensation
Hourly vs Salary © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

14 Contracts & Compensation
Total Compensation Healthcare Flexible Spending Account (FSA)- $2,650/Year Mass Transit & Parking- $260/Month Healthcare Reimbursement (QSEHRA)- $5,050/Year © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

15 Resources HWS Guide to Household Payroll HWS State Tip Sheets
HWS Knowledge Center HWS Blog QSEHRA Plan Template IRS Publication 926 Form Substitute for W2 © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

16 ? Questions? Call 1-800-NaniTax for a free telephone consultation OR
Visit SIMPLIFY! You have better things to do with your time… © HomeWork Solutions, All Rights Reserved. Reproduction by Permission Only.

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