GTM Household Help BLOG

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.

~ Update ~ The New York Metropolitan Commuter Transportation Mobility Tax

On September 29th, The NYS Department of Taxation & Finance confirmed that the new employer-paid Metropolitan Commuter Transportation Mobility Tax (MCTMT) is NOT REQUIRED for DOMESTIC EMPLOYERS!!

The New York MCTMT is imposed on certain employers and self-employed individuals engaging in business within the metropolitan commuter transportation district. This new law applies to:

• employers (other than public school districts) beginning on or after March 1, 2009
• employers that are public school districts within the metropolitan commuter
• transportation district beginning on or after September 1, 2009
• self-employed individuals for tax years beginning on or after January 1, 2009

The Metropolitan Commuter Transportation District (MCTD) is defined under section 1262 of the Public Authorities Law.  The MCTD includes New York City (the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island)), and the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.

The NYS Department of Taxation & Finance has not yet issued a publication regarding this information.  However, additional information on the requirements and procedures for the MCTMT will be made available on the Tax Department's Web site as they are developed.

The NYS Dept of Taxation & Finance has recently published new MCTMT frequently asked questions (FAQs).  To read the FAQs and get more information about this tax, click here.

*Please Note: If you receive any notices from NYS regarding the MCTMT, please e-Fax them to GTM's Tax Department at (518) 836-2497.

If you have specific questions on your tax obligations, our Tax Department and Client Service Representatives are available to assit you by calling (800) 929-9213, or by visiting GTM.com to Chat Live!

For a list of all reporting and filing deadlines, please click here to refer to GTM's online tax calendar.

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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.

Five Tax Facts about Summertime Child Care Expenses for Parents currently NOT utilizing DCAP options for Summer Child Care

Many parents who work, or are looking for work, must arrange for care of their children under 13 years of age during the school vacation.

If you’re a parent currently not utilizing the DCAP options available to you, here are five facts the IRS wants every parent to know about tax credits available for child care expenses.

The Child and 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 can count as an expense towards the child & dependent care credit.
2. Expenses for overnight camps do not qualify.
3. If your childcare provider is a sitter 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 income.
5. You may use up to $3,000 of the unreimbursed 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, including rules for claiming this credit for your spouse or a dependent age 13 or over who is not able to care for himself or herself, review 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 at (888) 432-7972. Since many qualifications and limitations apply to the various credits, additional information is available at www.IRS.gov.

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 GTM or another professional tax advisor for more information and to determine how any item applies to your personal tax scenario.

Federal Minimum Wage Rates To Increase In July

Under the Fair Labor Standards Act (FLSA), the federal minimum wage for covered nonexempt employees will increase to $7.25 per hour, effective July 24, 2009.

The federal minimum wage is the minimum amount per hour an employer (households and businesses (most business labor types) must pay their employees unless the state of employment has a higher state minimum wage or local prevailing wage. In that case, where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher minimum wage rate.

More information on this increase can be found on the U.S. Department of Labor website. And for more information on tax, payroll and HR services, visit the experts at GTM.com.

Child & Dependent Care Tax Credit Reminder

GTM Payroll Services would like to remind you of 2 important tax credits available from the IRS, as you prepare and file your tax returns… Check it out!

Tax Credits

If you’re a parent, you could be eligible for additional tax credits!! It could even mean you might receive a refund rather than owe any taxes.

1. The Child & Dependent Care Tax Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, to enable you to work or look for work. For more information, see IRS Publication 503, Child and Dependent Care Expenses.
2. The Child Tax Credit is for people who have a qualifying child. The maximum amount of the credit is $1,000 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses. For more information on the Child Tax Credit, see IRS Publication 972, Child Tax Credit.

See below for more information...

Top Ten Facts About the Child & Dependent Care Credit

If you paid someone to care for a child, spouse, or dependent, you may be able to reduce your tax by claiming the Child and Dependent Care Credit on your federal income tax return. Below are the top ten things you need to know about claiming a credit for child and dependent care expenses.

1. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child under age 13. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.
2. The care must have been provided so you – and your spouse if you are married – could work or look for work.
3. You – and your spouse if you are married – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or they were physically or mentally unable to care for themselves.
4. The payments for care cannot be paid to your spouse, to someone you can claim as your dependent on your return, or to your child who is under age 19, even if he or she is not your dependent. You must identify the care provider on your tax return.
5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
6. The qualifying person must have lived with you for more than half of 2008.
7. The credit can be up to 35 percent of your qualifying expenses, depending upon your income.
8. For 2008, you may use up to $3,000 of the expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals.
9. The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from your income.
10. If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. If you are a household employer, you may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. For information, see Publication 926, Household Employer's Tax Guide.

The following forms and information can be found online at GTM’s Household Tax Resource Center, under Tax Forms.

    * Publication 926 - Household Employment Tax Guide for Wages Paid in 2008
    * Form 2441 - Child & Dependent Care Expenses (2007) - File with Personal Federal 1040 Return
    * Form 2441 - Child & Dependent Care Expenses Instructions (2007)
    * Form W-10 - Dependent Care Provider's Identification and Certification (DO NOT FILE THIS FORM WITH TAX RETURN )

For more information on the Child and Dependent Care Credit, see Publication 503, Child and Dependent Care Expenses.  Since many qualifications and limitations apply to the various credits, additional information is available at www.IRS.gov.

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 a professional tax advisor for more information and to determine how any item applies to your personal tax scenario.

Top 5 Reasons For Paying The “Nanny Tax”

 Top 5 Reasons For Paying The “Nanny Tax”

5. Establishing a legally compliant and professional arrangement with your household employee benefits both of you.

a.     Appropriate payments to household employees, including those to a person who cleans your house, might qualify for the child-care credit. That’s a dollar for dollar credit if you qualify.

b.     It helps your employee establish work history, credit, U.S. citizenship, and other benefits. A legal employee can take advantage of Social Security and Medicare benefits, and may be eligible for unemployment compensation and the Federal Earned Income Credit.

4. Not reporting payments to household employees could cost you big bucks in terms of penalties and interest should you get caught.
   
   
   1. Employers who do not pay legally risk the chance of an audit, which can be costly and very time-consuming. There is no standard penalty. Penalties are determined by the IRS based on its analysis and the severity of each case.

3. Not paying social security taxes, assisting with withholding, or meeting state requirements for workers’ compensation and health insurance (as applicable) isn't just cutting through administrative hassles, it's illegal!
   
   
   1. Every fiscal quarter of sitting, housecleaning, nanny-ing, personal assistant-ing, or under-the-table anything - doesn't count toward the employee’s Social Security benefits unless the Nanny Tax has been paid.   

2. Opening the door to other legal issues, avoidance of “paying on the books” could result not only in IRS penalties, but state issues should your employee or former employee ever file for disability benefits.
   
   
   1. The best route is to make payroll taxes a condition of employment.

1. If you ever run or are appointed to political office, you can unequivocally state with a clear conscience that you legally abide by, and are compliant with, the Nanny Tax....
   
   “Next Question Senator?”

  

For more information, consult IRS publication 926 (available online at www.GTM.com), or for a FREE – No Obligation Tax Consultation, contact GTM at 800.929.9213 today! Or chat LIVE with one of GTM’s Tax & Payroll Specialists at www.GTM.com.

USCIS releases revised Employment Eligibility Verification Form (I-9)

On Wednesday, November 7, 2007, the USCIS released a revised Employment Eligibility Verification Form (I-9), which is now available for use.  It is a federal requirement that US employers complete an I-9 form for all employees within the first three days of employment, and retain the form for one year after termination of employment or three years, whichever is longer. While employers may start using the form immediately, it will officially become effective when posted in the federal register at a later date.  For more information on the form see GTM's free resource center for How to Hire a Nanny or by calling 800-929-9213 for a nanny tax / employment consultation.   

Be Careful when Hiring Help

Minnesota Woman’s Death may be Linked to Online Job Ad

Online ads may seem like the answer in a busy world, but besides a referral from a friend, staffing agencies are still the safest, most effective way to make household placements.  Nannies and Families alike should be aware of the possible dangers that exist when seeking a placement without a third party.  For more information see www.gtm.com or the book, How to Hire a Nanny.   

For Caregivers, Help is out there

Many adults today find themselves in the uncomfortable situation of having to care both for their children and their aging parents.  This ‘sandwich’ generation has to contend with a multitude of problems.  There is currently a large number of single, working mom’s having to deal with this issue, when in years past the number of single mom’s was smaller.  Also, even in a two-parent household, both parents are generally working hard, long hours.  Again, in years past a mother was frequently home, or worked less hours.  And then there are the cultural changes in which we don’t tend to stay home as much as we used to.  Running the kids to all their lessons and sporting events can easily be a full time job in itself.  So how do we deal with it all?  Help!!  Asking for help can be the most difficult experience for a caregiver, but it is vital for the health and well being of the family.  We all tend to feel awkward asking for assistance from friends and family whose lives are also busy.  That is why there are agencies that place hired help.  If your loved one needs a nurse or an aide that can do hands-on care, there are agencies that can help. Perhaps you just need a companion that can be hired, sometimes even through nanny agencies, that will keep your elder loved one company, and, more importantly, safe. And the best part is that these are pre-screened candidates who are professionals in their field!  For more information, contact your local senior service organizations, the Alzheimers’ Association and your local chamber of commerce for the businesses that specialize in elder care situations.  Help is there. It is important to know that when you hire a person to care for your loved one, they are considered an employee if they will be paid $1500 or more for the year. Paying your employee legally and on the books is another important way to protect and care for yourself and your family.  For more information on hiring household help, payroll and taxes, visit the experts at www.GTM.com.

Resources for Agencies

Agencies can be the best resource for parents looking to hire household help.  A good agency will provide your family with a candidate that has had their background checked, will give advise on interviewing, and can provide tips for those first few days with your new nanny.  They will personally meet with each nanny to better discern their personality traits, and work hard trying to match the right candidate with each family, which can be both difficult and time consuming.  Having an agency that is able to meet those needs can make the hiring process easier and much more efficient.  A good agency will have nannies and staff members who are keeping up with the trends of the industry as well as the needs of today’s families.  There are many resources out there for agencies to use to keep up to date.  Be sure that the agency that you are working with is a credible member of professional association such as the INA (International Nanny Association).  These associations provide agencies with the opportunity to network, to attend seminars and have access to training and support for their staff members.  In addition, there are also agencies that provide seminars, webinars and other web-based opportunities to share their expertise.  The numerous resources available allow these agencies to expand on their professional knowledge in a way that is beneficial for themselves, the families they serve, and the nannies that represent them.  For more information on hiring and retaining the best for your family, and for all your HR needs, visit our web site at www.gtmassociates.com.