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.

 

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.

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.

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.