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TB Testing: One of our clients has reminded us that it's a good idea to send your nanny or caregiver to get a TB test before they start working with your family. He hired someone, and they subsequently had a positive TB test result, so of course he did not allow them to start work.
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ARTICLE: Nanny Tax Paradox
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Daily Log: You may want to ask your nanny or caregiver to complete a daily log to help keep communications flowing smoothly. Here's a template which you could use in a three-ring binder: Caregiver's Log
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Workers' Compensation Insurance: Workers' Comp is mandatory for all employers in most states. It is not, however, a part of employment taxation and so is not included in this site. Generally you must make your own arrangements through your insurance agent or broker or through an insurance company licensed by your state to write workers' compensation policies. Here is one site with coverage of Workers' Compensation issues, state-by-state: Workers' Compensation Insurance
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Minimum Wage:Federal minimum wage under the Fair Labor Standards Act is $5.15 per hour. Many states enforce higher minimums.
(2003) Alaska $7.15, California $6.75, Connecticut $6.90, Delaware $6.15, District of Columbia $6.15,
Hawaii $6.25, Maine $6.25, Massachusetts $6.75, Oregon $6.90, Rhode Island $6.15, Vermont $6.25, Washington $7.01
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IRS Publication: Federal Child and Dependent Care Credit
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Busfare:Federal Transportation Equity Act allows employers to reimburse each household worker tax-free up to $100 per month ($65 in 2001) for cost of public transporation to the worksite. This reimbursement is not included in any tax or wage reports you file.
Parking:Federal rules allow you to reimburse each household worker tax-free up to $190 per month ($185 in 2002, $180 in 2001) for cost of parking near the worksite or parking near a location from which the employee commutes to the worksite. This reimbursement is not included in any tax or wage reports you file.
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Meals and Lodging:When meals and lodging are provided to a household worker on the employer's premises for the convenience of the employer and as a condition of employment, their value is not included as wages for either federal employment taxes or income taxes. Some states do not follow the federal lead.
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Health Insurance:You may purchase health insurance for your household workers and their families without having to include the value as wages for either income tax or employment tax purposes. Make the payment directly to the insurance provider, not to the worker, and do not include in any wage or tax reports.
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Business or Farm:If you file payroll tax returns for a business as a sole proprietor or for a farm, you may elect to include your federal household employment taxes and wages with those filings instead of filing on Schedule H.
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Social Security Administration Publication: Household Workers
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CA Brochure: Paying cash wages "under the table" Is it really worth the risk?
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Article: Bankrate.com Household help often poses tax pitfalls for employers
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Article: Smart Money on Nanny Taxes (Numbers are out-of-date but info is good.)
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Top Ten Reasons to Comply with Household Employment Tax Laws
- It's fair and respectful to other taxpayers, the worker, and you.
- The worker's legal employment history may help their credit status.
- The worker may one day need social security and medicare benefits.
- The worker may one day need your state's unemployment or disability programs.
- The employer may benefit from certain income tax credits.
- The employer may benefit from a dependent care account at work.
- The worker may benefit from federal earned income credit.
- The employer risks liability for both employer and employee taxes, interest, and penalties.
- It's the law.
- The President may nominate you for Attorney General, or Secretary of Labor.
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