GTM Household Help BLOG

Common Questions Regarding W-2s

Tax season is in full-swing and we are answering many questions from our household clients regarding W-2s. As a result, we thought it be beneficial to focus this month’s blog on some of them. Hopefully, after reading our responses, we’ll be able to save you some time and help clarify any of your concerns.

Q: Does my employee receive a 1099 form?
A: No. Household employees are not independent contractors. They receive W-2 forms. View more information on this topic.

Q: What is the deadline for giving the W-2 to my employee?
A: The W-2 form needed to be postmarked by January 31 of this year.

Q: I paid my employee directly for the first 4 months of the year. Are those wages included on the W-2?
A: Yes. You should include all wages (on your own or with the assistance of GTM (or other payroll provider) on one W-2 and not more than one.

Q: My employee was paid a net amount. Why are the wages on the W-2 higher than what I paid her?
A: The W-2 form reports “Gross” wages paid to an employee, not net. Even if you negotiated and agreed upon paying a net wage, your employee’s Social Security, Medicare and possibly Federal and State income taxes are added on top of the net in order to calculate the “Gross” wages that are reported as his/her income.

Q: When do I have to file the W-2 and W-3 with the Social Security administration?
A: If you have a payroll provider, you should first check with them to make sure they are not doing this on your behalf. If you have to do it on your own, the deadline for submitting the forms electronically is 2/29/2012. The deadline for filing a paper copy is 4/2/2012.

Q: What do I do with the Schedule H form?
A. This form is included with your personal income tax return. You should provide a copy to your accountant or should include the information, if filing your own return.

Q: What is reported on a Schedule H form?
A. A Schedule H form reports total gross wages, your employee’s portion and your employer portion of social security and Medicare taxes, your federal unemployment tax, and contributions made to your state for unemployment insurance.

Q: My employee was on disability for a few months. Are those wages included in the W-2 form? 
A: Yes. The disability company should have provided a report of your employees’ income that was paid out to her. You should provide this report to your payroll provider to be included in your employee’s W-2 wages.

 

As always, please contact us anytime at householdpayroll@gtm.com or 888-432-7972 if you have additional questions or would like to learn more about GTM Payroll Services Inc.

 

~ Summertime Child Care Tax Credit Reminder ~

Day Camp Expenses May Qualify for Tax Credit  

 (An excerpt from IRS.gov)

Are you a parent who’s hired a summer-nanny to care for your children? Or have you taken advantage of the many day-camp options available during the summertime school break?  If so, you'll be relieved to know that you may be entitled to one or more tax breaks!

While temperatures and extra expenses seem to escalate quickly during the summer months, the IRS has some good news for parents:  Those additional child care expenses may help you qualify for a tax credit!

 Here are five facts that you should know about the Child & Dependent Care Tax Credit:

1. The cost of day-camp may count as an expense towards the Child & Dependent Care Tax Credit
2. Keep-in-mind, expenses for overnight camps do not qualify.
3. Whether your childcare provider is a sitter at your home or at a daycare facility doesn’t matter, parents can still get some tax benefit if qualified for the credit.
4. The credit could amount to as much as 35% of qualifying expenses, depending upon your household income.
5. You may use up to $3,000 of the un-reimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information check out IRS Publication 503, Child and Dependent Care Expenses.  This publication is available from the IRS or on GTM.com under Tax Resource Center. 

For specific questions, contact GTM’s Household Tax & Payroll Specialists toll-free at (888) 432-7972 or simply click here to discover your potential Tax Savings using our FREE online tax calculator!   The most accurate tool currently available, including annualized payroll and tax information, GTM’s FREE online tax calculator aids in estimations for Tax Savings which household employers could potentially benefit from, including DCAP and Child & Dependent Care Tax Credit calculations.

Since many qualifications and limitations apply to the various credits, additional information is available at www.IRS.gov.

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At GTM we aim to provide access to the most comprehensive services & solutions available with better advice, better service and better value...for an easier life!  With nearly 20 years of advocacy for the professionalism of the household employment industry, New York-based GTM Payroll Services has been continually guiding and educating thousands of clients throughout the U.S. with services for household employment such as "nannytax", labor compliance, human resources help, workers' compensation and health insurance needs.  Additionally, Guy Maddalone's How To Hire A Nanny: A Household HR® Handbook (Sourcebooks/Sphinx Legal, 2006) has helped set the standard for any family interested in learning how to be a compliant and successful employer.  

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The items included in this blog are informational only and are not meant to exclude the tax advice from an accredited representative.  Please consult the experts at GTM or another professional tax adviser for more information and to determine how any item applies to your personal tax scenario.

 

Important Changes To New York State Labor Law Under Wage Theft Prevention Act

On Tuesday, December 14^th, New York Governor, David Paterson, signed into law the Wage Theft Prevention Act.  Paterson was quoted as saying, “At a time when so many New Yorkers are living paycheck to paycheck, it is vital that we protect the right to receive their hard-earned pay and afford them every protection against wage theft.”

In essence, the new Wage Theft Prevention Act, or “The Act”, would institute a series of far-reaching measures which:

• Enact more stringent, transparent record-keeping and employee notification requirements
• Increase the amount of wages that can be recovered as damages for non-payment over and above lost wages – from 25 percent to 100 percent
  • Along with increasing protection for workers who speak up against exploitative employers
  • Create stronger collection, investigation and enforcement tools for State Department of Labor
  • Raise criminal penalties for wage violations; to up to a year in prison and $5,000 fine
  • Strengthen protections for whistleblowers in cases involving wage violations

In more detail, “The Act”, which goes into effect April 9, 2011, makes several changes to New York’s Labor Law, including:

• Amending requirements of employers to provide notices to employees hired on or after October 26, 2009; as well as information on exempt status, pay rates and structure of pay. (Section 195)
  • “The Act” further amended Section 195, adding a new requirement that employers provide all employees with such notices at the time of hire, as well as on or before February 1 of each subsequent year of employment. In addition to information previously required under Section 195, these notices now require new information, such the basis of pay rates (ie: hourly, shift, day, week, salary, piece, commission, or other); any allowances claimed as part of the minimum wage; as well as detailed employer contact information.
  • Further, the notice must be provided both in English and in the employee’s primary language. (The NYS Commissioner of Labor is tasked with creating non-English template notices.)
  • Employers must maintain these notices for six years.
  • An employee who does not receive such a notice within 10 days of hire may report this violation to NYS DOL; in effect bringing action against the employer to recover $50 per week not notified, up to $2,500.

• Information in wage statements— Employers are required to provide comprehensive pay statements each payroll period, specifying applicable dates that wages cover, employee/employer names, address and phone number, the rate or rates of pay and the basis thereof, gross deductions, allowances claimed as part of the minimum wage, and net wages. Non-exempt employees must be provided with statements that include the following additional information: the regular hourly rate or rates of pay, the overtime rate or rates of pay, the number of regular hours worked, and the number of overtime hours worked.

  • Employers must maintain these statements for six years.
• Liquidated Damages — Section 198 was amended to increase liquidated damages from 25% under the current law, to up to 100% of the total amount of wages due. 
• Additional Anti-Retaliation Penalties — Section 215 was amended to allow the NYS Commissioner of Labor to order additional remedies in retaliation actions; including heavy penalties and other recourse.
• Levies — The limitations period for actions brought under the Labor Law is tolled from the latter of the date of the employee complaint to the Department of Labor or the date of the NYS Commissioner of Labor’s commencement of an investigation.

Following a national trend toward strengthening worker-protection, New York now joins several states and localities with wage theft changes this year such as: Maryland, Illinois, Massachusetts, Nebraska and Washington.  

Available for download on GTM.com are the NYS (LS54) Pay Rate Notice Form (for Hourly Employees) and the NYS (LS59) Pay Rate Notice Form (for Exempt Employees).

GTM will continue to monitor these Labor Law changes to provide clients with ongoing support for all of their employment needs.  Our dedicated customer service team is available to answer any questions that clients may have regarding “The Act” in general; or more specifically in regard to calculating rate of pay, overtime rate of pay, or reporting requirements as amended under Section 195; Simply call (518) 373-4111 or email customerservice@gtm.com.

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At GTM we aim to provide access to the most comprehensive services & solutions available with better advice, better service and better value...for an easier life!  With nearly 20 years of experience in the payroll services industry, New York-based GTM Payroll Services has been continually guiding and educating thousands of clients throughout the U.S. with services such as labor compliance, human resources services, workers' compensation and health insurance needs. 

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The items included in this blog are informational only and are not meant to exclude the tax advice from an accredited representative.  Please consult the experts at GTM or another professional tax adviser for more information and to determine how any item applies to your personal tax scenario.

NY Labor Law Changes Take Effect November 29th

Provisions Under New York’s Domestic Workers’ Bill Of Rights Take Effect November 29^th

Important update for New York Employers regarding changing Labor Laws,
from the nanny payroll tax experts at GTM Payroll Services

Earlier this year, the landmark signing into law of New York’s Domestic Workers’ Bill of Rights, amended the state’s labor law, executive law and workers' compensation law; as they relate to the employment of domestic workers. 

On November 29, six specific provisions under this new law will go into effect.  Of particular importance is the establishment of regulations impacting:

1. Pay Frequency
2. Overtime Compensation
3. Time off (Unpaid and Paid)
4. Insurance
5. Notification to Employees and Record Keeping
6. Protection from Unlawful Discrimination

GTM recommends that all NYS employers review these changes to the labor laws, and take the appropriate action necessary for compliance, by or on November 29, 2010.  Please click here for more detailed information on each of the above provisions and steps that need to be taken. 

GTM will continue to monitor this legislation to provide clients with ongoing support to aid with all of their household employment needs.  Our customer service team is available to answer any questions that clients may have regarding this law.  Simply call (800) 929-9213 or email customerservice@gtm.com.

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At GTM we aim to provide access to the most comprehensive services & solutions available with better advice, better service and better value...for an easier life!  With nearly 20 years of advocacy for the professionalism of the household employment industry, New York-based GTM Payroll Services has been continually guiding and educating thousands of clients throughout the U.S. with services for household employment such as "nannytax", labor compliance, human resources help, workers' compensation and health insurance needs.  Additionally, Guy Maddalone's How To Hire A Nanny: A Household HR® Handbook (Sourcebooks/Sphinx Legal, 2006) has helped set the standard for any family interested in learning how to be a compliant and successful employer.  

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The items included in this blog are informational only and are not meant to exclude the tax advice from an accredited representative.  Please consult the experts at GTM or another professional tax adviser for more information and to determine how any item applies to your personal tax scenario.

Important Update for NYS Household Employers ~ NYS Domestic Workers' Bill of Rights Signed Into Law

On Tuesday, August 31 2010, NYS Governor Paterson signed the Domestic Workers Bill of Rights into law, which takes effect November 29, 2010.  The signing of the new law was to amend the labor law, the executive law and the workers' compensation law, in relation to establishing regulations regarding employment of domestic workers including hours of labor, wages and employment contracts.
 
The Domestic Workers Bill of Rights had many amendments, thus leaving out some proposed items passed by the Assembly as well as items that were passed separately by the Senate earlier this year. 

The final Domestic Workers Bill of Rights that was signed into law now establishes the following effective 11/29/10:

Labor Standards:

1. One day of rest every calendar week, waivable by the worker with pay for that day at the overtime rate of 1 and a 1/2 times their regular hourly rate. The day of rest will, whenever possible, coincide with the traditional day of religious worship.
2. After 1 year of work with the same employer, 3 days of rest per year at the regular rate of compensation.
3. It will be an unlawful discriminatory practice for any domestic employer to:

a)    engage in unwelcome sexual advances, requests for sexual favors or other verbal or physical conduct of a sexual nature to a domestic worker when:

i.    submission to such conduct is made a term or condition of the worker's employment;

ii.    submission to or rejection of such conduct by a worker is used as the basis for employment decisions; or

iii.    such conduct has the purpose or effect of unreasonably interfering with a worker's job performance by creating an intimidating, hostile or offensive working environment; or subject a domestic worker to harassment based on gender, race, religion or national origin, where such harassment has the effect of unreasonably interfering with work performance by creating a hostile working environment.

Wage and Hour

1. Consistent with the current law, Overtime pay after 40 hours of work per week for domestic workers who do not live with their employers.  And overtime pay after 44 hours of work per week for live-in domestic workers at a rate of 1 and a ½ times their regular hourly rate.  
2. Department of Labor is given wage and hour enforcement powers for domestic workers.

Insurance

a)    Disability Insurance to part time domestic workers. *  

*According to the ACTs summary provisions' Disability Insurance was listed as it would be required for Part time domestic workers.  However when GTM contacted the NYS Workers Compensation Board, who enforces disability and workers' compensation insurance requirements, they said the law had not actually changed and it is still a 40 hour minimum before domestic employers are required to have disability and workers compensation insurance.  We will continue to monitor this to see if that opinion changes.

GTM recommends that all NYS employers review these changes and make changes to their current employment agreements and handbooks by or on November 29, 2010.

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At GTM we aim to provide access to the most comprehensive services & solutions available with better advice, better service and better value...for an easier life!  With nearly 20 years of advocacy for the professionalism of the household employment industry, New York based, GTM Payroll Services has been continually guiding and educating thousands of clients throughout the U.S. with services for household employment such as "nannytax", labor compliance, human resources help, workers' compensation and health insurance needs.  Additionally, Guy Maddalone's How To Hire A Nanny: A Household HR® Handbook (Sourcebooks/Sphinx Legal, 2006) has helped set the standard for any family interested in learning how to be a compliant and successful employer.  

GTM will continue to monitor this landmark legislation to provide ongoing support to aid you with all of your household employment needs.

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The items included in this blog are informational only and are not meant to exclude the tax advice from an accredited representative.  Please consult the experts at GTM or another professional tax adviser for more information and to determine how any item applies to your personal tax scenario.

Summertime Child Care Reminder ~ Child Care Expenses May Qualify for a Tax Credit

(An excerpt from IRS.gov)

A reminder from the household payroll & nanny tax experts at GTM Payroll Services and the IRS, regarding summertime child care.

Did you know that your summer day care expenses may qualify for an income tax credit?

Many parents who work or are looking for work must arrange for the care of children under 13 years of age during the school vacation. Did you know that those child care expenses may help you get a credit on next year’s tax return?

If you’re a parent currently notutilizing the DCAP options available to you, here are five facts the IRS wants you to know about a tax credit available for your child care expenses. The Child & Dependent Care Credit is available for expenses incurred during the lazy hazy days of summer and throughout the rest of the year.

1. The cost of day camp may count as an expense towards the child and dependent care credit.
2. Expenses for overnight camps do not qualify.
3. If your childcare provider is a sitter/ nanny at your home or a daycare facility outside the home, you'll get some tax benefit if you qualify for the credit.
4. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
5. You may use up to $3,000 of the un-reimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available from the IRS or on GTM.com under Tax Resource Center.

For specific questions, contact GTM’s Household Tax & Payroll Specialists toll-free at (888) 432-7972 or simply click hereto discover your potential Tax Savings using our FREE online tax calculator!   The most accurate tool currently available, including annualized payroll and tax information, GTM’s FREE online tax calculator aids in estimations for Tax Savings which household employers could potentially benefit from, including DCAP and Child & Dependent Care Tax Credit calculations.

Since many qualifications and limitations apply to the various credits, additional information is available at www.IRS.gov. Also, please see the following post:  5 Tax Topics for Taxpayers with Tots & Teens.

At GTM we aim to provide access to the most comprehensive services & solutions available with better advice, better service and better value...for an easier life!

The items included in this blog are informational only and are not meant to exclude the tax advice from an accredited representative.  Please consult the experts at GTM or another professional tax adviser for more information and to determine how any item applies to your personal tax scenario.

New York State Senate Passed The Domestic Workers Bill Of Rights

FOR IMMEDIATE RELEASE GTM Poised To Aid Domestic Staffing Agencies & Household Employers   JUNE 3, 2010– (Albany, NY) – Earlier this week, the New York State Senate passed the Domestic Workers Bill of Rights (S2311D) making New York the first state in the nation to move forward with new standards of worker protections for more than 200,000 employees in New York’s household employment industry.   A long-time advocate for the advancement and professionalism of the household employment industry, GTM recently highlighted Senator Savino, the first Senate Sponsor of the legislation, who stated, “They (domestic workers) are our companions to the elderly, housekeepers, and nannies and provide crucial services to those who employ them.  They should be afforded the same rights, respect, and dignity as the rest of workforce in our State.”   Every year, thousands of new families enter the market and take advice from ill informed friends and colleagues who believe you don’t have to pay taxes on workers or abide by labor standards.  This belief and consequential actions are of detriment to those working in households, who are all left penalized by lack of work history and benefits.  As noted in the Senate debate, hundreds of thousands of New Yorkers are able to do their own jobs and keep their families functioning only because they rely on the labor of nannies and caregivers.   GTM Founder and CEO, Guy Maddalone said, “After years of the industry promoting best practices and still only seeing a small percentage of compliance, it appears New York has now decided to take more extreme measures.”  He further stated, “It will be interesting to see how these new measures will impact tax and labor compliance.”   With nearly 20 years of advocacy for the professionalism of the household employment industry, New York based, GTM Payroll Services has been continually guiding and educating thousands of clients throughout the U.S. with services for household employment such as “nannytax”, labor compliance, human resources help, workers’ compensation and health insurance needs.  Additionally, Guy Maddalone’s How To Hire A Nanny: A Household HR® Handbook (Sourcebooks/Sphinx Legal, 2006) has helped set the standard for any family interested in learning how to be a compliant and successful employer.    More information on this important legislation can be found on the New York State Senate website (www.nysenate.gov).  For more information on our tax, payroll, HR and insurance services, visit the household employment experts at GTM.com.

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GTM’s expertise in the household employment and business services arenas enable us to offer the information, services, tools and resources our clients need. For a FREE – No Obligation Consultation for your household or business, contact GTM at 800.929.9213today!  Or chat LIVE with one of GTM’s professional Tax & Payroll Specialists at www.GTM.com.

At GTM we aim to provide access to the most comprehensive employee benefit plans & solutions available with better advice, better service and better value...for an easier life!

5 Tax Topics for Taxpayers with Tots & Teens

(An excerpt from IRS.gov)

Got Kids? They may have an impact on your tax situation. Listed below are the Top 5 things the IRS wants you to consider if you have children...

1. Dependents In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.
   
2. Child Tax Credit* You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. The Additional Child Tax Credit is a refundable credit and may give you a refund even if you do not owe any tax. For more information see IRS Publication 972, Child Tax Credit.
   
3. Child and Dependent Care Credit* You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work. For more information see IRS Publication 503, Child and Dependent Care Expenses.
   
4. Earned Income Tax Credit The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.
   
5. Adoption Credit You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. For more information see the instructions for IRS Form 8839, Qualified Adoption Expenses.

For the IRS’ Top 10 List for Taxpayers with Teens & Tots…click here >> 

For information on these tax topics, contact GTM at (888) 432-7972 or visit  GTM.com.

*For information on these Child Care Tax Credits, click here to discover your potential Tax Savings using GTM's FREE online tax calculator!

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GTM’s expertise in the household employment and business services arenas enable us to offer the information, services, tools and resources our clients need. For a FREE – No Obligation Consultation for your household or business, contact GTM at 800.929.9213today!  Or chat LIVE with one of GTM’s professional Tax & Payroll Specialists at www.GTM.com.

At GTM we aim to provide access to the most comprehensive employee benefit plans & solutions available with better advice, better service and better value...for an easier life!

Tax Tips - Five Important Facts about Dependents & Exemptions

(An excerpt from IRS.gov)

When you prepare to file your tax return, there are two things that will factor into your tax situation: dependents and exemptions. Here are five important facts that the IRS wants you to know about dependents and exemptions before you file your 2009 tax return.

1. If someone else claims you as a dependent, you may still be required to file your own tax return. Whether or not you must file a return depends on several factors, including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and, any advance Earned Income Tax Credit payments you received.

2. Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,650 on your 2009 tax return. Exemption amounts are reduced for taxpayers whose adjusted gross income is above certain levels, depending on your filing status.

3. If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.

4. Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.

5. Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.

For more information on exemptions, dependents and whether or not you or your dependent needs to file a tax return, see IRS Publication 501,available on IRS.gov.  

**Don't forget about the Child & Dependent Care Tax Credit or your individual DCAP plans.
For information on these tax credits or your nanny tax compliance, contact GTM at (888) 432-7972, visit  GTM.com, or simply click here totry discover your potential Tax Savings using our FREE enhanced online tax calculator!

The most accurate tool currently available, including annualized payroll and tax information, our FREEenhanced online tax calculator aids in estimations for Tax Savings which household employers could potentially benefit from, with NEW DCAP and Child & Dependent Care Tax Credit calculations. 

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GTM’s expertise in the household employment and business services arenas enable us to offer the information, services, tools and resources our clients need. For a FREE – No Obligation Consultation for your household or business, contact GTM at 800.929.9213today! Or chat LIVE with one of GTM’s professional Tax & Payroll Specialists at www.GTM.com.

At GTM we aim to provide access to the most comprehensive employee benefit plans & solutions available with better advice, better service and better value...for an easier life!

 

Compliance Update

Social Security Wage Base Remains at $106,800 in 2010

The Social Security Administration (SSA) announced on Thursday, October 15, 2009, that the 2010 social security wage base will be $106,800, unchanged from 2009. As in prior years, there is no limit to the wages subject to the Medicare tax; therefore all covered wages are still subject to the 1.45% tax.

The FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, remains at 7.65% for 2010. The maximum social security tax employees and employers will each pay in 2010 is $6,621.60. This is unchanged from the 2009 maximum.

The social security wage base for self-employed individuals in 2010 will also be $106,800. There is no limit on covered self-employment income that will be subject to the Medicare tax. The self-employment tax rate remains 15.3% (combined social security tax rate of 12.4% and Medicare tax rate of 2.9%). In 2010, the maximum social security tax for a self-employed individual will be $13,243.20. This is unchanged from the 2009 maximum.

FICA coverage threshold unchanged for domestic workers

The threshold for coverage under social security and Medicare for domestic employees will be $1,700 in 2010, unchanged from 2009.

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At GTM we aim to provide access to the most comprehensive services & solutions available with better advice, better service and better value...for an easier life!

The items included in this update are informational only and are not meant to exclude the tax advice from an accredited representative.  Please consult GTM for more information and to determine how any item may apply to your personal tax scenario.