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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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.

States and IRS agree to Share Employer Data

In an effort to increase employer compliance on both the federal and state level 29 states’ workforce (unemployment) agencies recently signed a memorandum of understanding with the IRS to provide employer tax examination information. The goal is to spot tax schemes and illegal practices as well as encourage voluntary compliance.  Those states that have entered into agreements with the IRS include Arizona, Arkansas, California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas Utah, Vermont, Virginia, Washington and Wisconsin.

For more information on household payroll tax services contact www.gtm.com or call 800.929.9213.

Nanny Taxes, Giuliani and a bid for President

Bernard Kerik is back in the news, and Rudy Giuliani is wishing that he wasn’t. You may remember that Mr. Kerik withdrew his name from the nomination for Homeland Security Secretary because he had hired an illegal immigrant for his nanny and had not paid all of the taxes due for her.  It turned out that that was just the beginning of his legal troubles, and now he has charges of tax evasion and conspiracy against him.  While all of this obviously affects Mr. Kerik, it is also being felt in Washington as Rudy Giuliani, the front runner in the presidential race, is being questioned about just how much he knew concerning Mr. Kerik’s dealings.  Mr. Giuliani is now back-pedaling from his support of the man.  Surely his advisers are more than a bit nervous.  While not everyone has the political world, and the media, looking through every detail of their life, it is important to note that not paying your nanny taxes, paying under the table, is a crime.  It has consequences that can lead to criminal charges, serious fines and, in the case of politicians, public disgrace.  In this case, what started as a simple withdrawal from the nomination due to the circumstances of his nanny could potentially have an effect on who will be the next president of the US.  For more information on paying your employee legally and on the books, visit the household employment experts at www@gtm.com.

Is Your Nanny An Employee?

For those who live in NY State, Governor Spitzer recently signed into law legislation that makes it a felony to have failed to carry required workers' compensation coverage for five or more employees during a 1 year period. The law will also consider improperly classifying employees as independent contractors a crime. There is a common misconception among household employers that they can classify their household help as independent contractors.  There are specific differences between an employee and an independent contractor. 

An employee is a person who works for you, takes instruction from you, and uses tools and equipment supplied by you.

An independent contractor is a person who works for him/herself, may have many customers, makes his/her own decisions on how to accomplish the job, and is expected to defer to your judgment and guidance.

When in doubt, consider this: 

      Is the homeowner controlling the work being performed, the equipment and facilities used? Are the worker's contributions integral to the business? Is this a permanent working relationship? If the answers to these are yes, they are an employee.

It is best to consider the person an employee if you are still unsure.  Liabilities for misclassification can include:

·          Back taxes

·          Tax penalties and interest

·          Workers' compensations premiums

·          Unemployment insurance contributions

·          Potential liability under state or federal employment laws for overtime

·          And now, in some states, prosecution.

Knowledge of what you owe and being compliant can save you and your family from a very difficult and costly situation.  For more information on compliance and your nannies payroll/taxes, visit the Household Employment Experts at www.gtm.com.

Immigration Legislation Consequences

It is in the news daily, in the papers, on the radio and on the talk shows.  Immigration.  People are protesting in record numbers, and some are comparing it to the civil rights movement.  There are 11 million illegal immigrants in this country; many working regularly at jobs that some say Americans won’t take.  The idea behind the marches is that these illegal immigrants who have become Americanized, work hard and pay taxes should be allowed the opportunity to become American citizens.  The opposite side of that is that they have been living in our country illegally, and should not, therefore, be rewarded.  Whatever side of the issue you are on, the consequences of the debate and the reform that is being put forth will have enormous repercussions throughout our society, both on the immigrants who are here and on the employers who hire them.  In some of the scenarios being proposed, those who hire and encourage these illegals can potentially face fines and other serious consequences.  Keeping up with the debate is crucial to anyone who may have hired an immigrant.  Having all the relevant paperwork on hand and having addressed this issue in a proactive way will help those household employers who have already hired.  And being legal in every aspect of your employment is imperative.  When the government starts looking at these immigrants, they will be checking to see how legal they have been otherwise, and how legal and above board the employer has been.  Protect yourself and your family.  For more information on staying legal, payroll and taxes, visit the household employment experts at www.gtmassociates.com.

Immigration, Nanny, Taxes and the Law

Immigration. The current ripple that is being seen and felt all across the country has much to do with how far our immigration policies should go.  How far do we need to take the issue, and should we allow any immigrants to stay?  It’s a political issue, and a human rights issue.  But how does it really affect you, or me?  Well, if you are a household employer, it could have quite an impact.  A large percentage of illegal immigrants go into the household employment industry.  Because of this, if the government truly decides to go after illegal immigrants and those who hire them, they could likely look very hard at the household employment industry.  Hiring practices, therefore, should be as above-board as possible.  Be sure to check all the necessary documentation to ensure that you are hiring legally, filling out the I-9 form, and keep your paperwork in a safe place.  While you are at it, be sure that you can prove that you are completely legal, that you are paying your employee on the books, fulfilling your end of the tax obligation and withholding taxes if the employee agrees.  The government does not treat tax fraud kindly, and are beginning to crack down on those with frivolous excuses.  Fines can go over $25,000, costing you much in money, time, reputation and convenience. Best hiring practice is to do it right the first time, above-board and legal.  As the months go by, we will see how the government intends on dealing with the immigration issue.  But in the meantime, staying legal greatly reduces your stress over both your and your employees’ future.  For more information on household human resources and hiring practices, visit the household employment experts at www.gtmassociates.com.  And if you have any questions or comments, please feel free to send them to us.

Tougher Immigration Policies are Changing the Face of Deportees

There are many people who are in this country illegally.  They have jobs here in which they work hard, have family and friends.  In many cases they are valued members of the community they live in.  And yet, under our immigration policies, they are being deported.  For those who are thinking of hiring someone who is not here legally, or for those who already have, it is important that you look into the laws now.  An article in today’s Boston Herald.com covers a nanny from Belgium who is about to be deported.  She has broken no other laws, has paid her taxes and has been employed by the family that she works for for 2 years.  For them, she is family, and they have tried everything including an attempt to adopt her to keep her in this country, to no avail.  The rise in the number of cases of immigrants who have committed no crime yet are being deported is climbing rapidly.  For the families who hire them, the implications could eventually lead to more than just an inconvenience at having to find another nanny. If you have not been paying nanny taxes as well, the situation could turn into penalties and even jail time.  The laws are getting much stricter, and will likely become even more so.  Hiring legally and following all the laws for your state on domestic help is the best way to protect your family and yourself from liability.  For more information on hiring and retaining your household help, visit the household employment experts at www.gtmassociates.com. 

Paying Taxes and Staying Legal

It is in the news daily lately…illegal immigrants and the new immigration policies that President Bush wishes to put into effect.  The owner of six popular Chinese restaurants has pleaded guilty to federal charges regarding illegal immigrants.  He is charged with income tax evasion, conspiring to harbor aliens and unlawfully employing aliens.  While his was a crime beyond household employment infractions, it is vital to remember that by employing illegal aliens, or by not paying your legal nanny and household help “on the books,” you are breaking the law and will be held accountable if caught.  And we are hearing more each day about people who are, indeed, getting caught. For more information on staying legal and retaining your household help, contact the Human Resource and Tax experts at www.gtmassociates.com.

Mileage rate changes for Nannies and Businesses

The end of the year is fast approaching, and with it comes tax changes for 2006.  One such change will be on the mileage rates used to calculate the deductible costs of operating an automobile for business purposes.  According to the IRS web site, the 2005 rate was 40.5 cents per mile until September, when it was raised to 48.5 cents to cover the increase in gas prices.  As of January 1, 2006 the rate will drop to 44.5 cents a mile for business use.  As always, it is important to keep up with the changes in tax laws and to have a reputable tax person who understands your specific needs.  We at GTM Household Employment Experts have the expertise in the specific area of Household Employment to be sure that you are following the State and Federal Guidelines and Laws that apply.  For more information, please visit our web site at www.gtmassociates.com or call one of our helpful advisors at 888-432-7972.

Nannies, Household Help and Immigration

There has been quite a bit in the news on the immigration policies that President Bush is attempting to overhaul.  While we want to strengthen our borders and stop illegal immigrants from crossing into our country, there is still the question of what to do with those that are here, working and living in America.  Many conservatives are concerned that there will be a push to grant these illegal immigrants legal status.  The President seems to be making it very clear, however, that he wants to grant temporary legal status with an end date, and that these immigrants would, at some point, have to return to their home countries.  With the political spotlight on this issue, it is very important that those who employ household help make sure that the people that they employ are legal and eligible to work in the United States.  Following the proper procedures when hiring and making sure that all the correct paper work is filed according to federal and state laws will ensure compliance and protect the employer and employee from any liability.  To learn more about hiring laws and how to hire legally, visit the household employment experts at www.gtmassociates.com.