With 25 years in the home-care industry, Care.com HomePay is here to help you be a great household employer.
By Lauren Jones
The kids are dressed, pencils are sharpened and lunches are packed, but aren’t you forgetting something? When school starts back up again and schedules change, there is often a shift in care needs, be it part time, after school or even full time. Hiring a caregiver is, first and foremost, about finding the right care for your family. But it’s also about your role as a household employer and taking the steps to look after those who look after you and your family.
It’s important to learn the facts. If you pay a household employee $2,000 or more during the calendar year, the Internal Revenue Service considers you an employer and you must file taxes. While many nannies are still paid out of pocket, paying your nanny legally will ensure she has access to Social Security, unemployment insurance, a recorded work history (which is essential for getting a loan or even renting an apartment) and many other critical benefits.
When you pay your nanny legally, as you should, you will be rewarded with tax breaks that help make care more affordable. You can sign up for a flexible spending account, offered by many employers, which is not taxable, or take advantage of the Child and Dependent Care Tax Credit, through which families with one child will save about $600 in taxes, and families with two or more children will save upwards of $1200 annually. These significant breaks are only available if you’re paying your nanny legally.
Also, remember, as an employer, you must file a W-2. Make sure you have your nanny’s current address, and if you’re planning to use the Child and Dependent Care Tax Credit, you will have to enter her social security number as well.
If this information is new to you, there is no need to panic. Care.com HomePay is here to help. With 25 years of experience in the home-care industry, this innovative company has helped more than 60,000 families throughout the U.S. with payroll, taxes and human-resources responsibilities.
Paying your nanny and filing the appropriate taxes should not be a nightmare, and Care.com HomePay’s online nanny tax calculator can help determine the costs when taking into account desired wages and deductions, as well as tax-break advantages. If you have further questions, you can request a free consultation with a Care.com HomePay team member.
The IRS estimates families spend an average of 55 hours each year determining how much they owe in nanny taxes and filing all the necessary paperwork in order to comply. But with Care.com HomePay, that will never be your reality. With Care.com HomePay’s comprehensive services, you will be able to pay your nanny legally, affording her all of the benefits she deserves as your employee, avoid the headaches that accounting can bring and be able to spend more time with your family.
So, before you forget, take a peek at Care.com HomePay online. Look around, get acquainted and set yourself up to be a great household employer.