IT’S TAX TIME AGAIN – the benefits of being on the books – Employers & Employees

Monday, April 4, 2011

Benefits of Paying Nanny Taxes

www.tips-fb.com

It’s tax season and time to remind nannies the benefits of being paid on-the-books. 
No one likes paying taxes, and certainly many nannies don’t. In fact, it is estimated that 80% to 90% of household employers may not be paying taxes. Nannygate has become the popular term for employers who don’t pay their household employee’s taxes. Nannygate is an epidemic in America in part due to the fact that nannies don’t insist their employer’s are tax compliant because they don’t realize the benefits of being paid-on-the-books.

Here are some of the benefits to being paid legally: 

History of Employment: Payment history helps to develop credit which is needed when applying for any type of loan including a credit card, car, mortgage, and rent.
Unemployment Benefits: Employees who lose their jobs, through no fault of their own, are able to receive a portion of their salary after a lay-off. This benefit is essential in a difficult economy.

Disability Benefits: If you have a non-work related illness or need to take maternity leave, you can collect Disability Insurance while you are unable to work. 

Workers Compensation: Workers Compensations covers employees who become sick or injured while working. It is an insurance plan to help pay for necessary medical care. 

Social Security and Medicare: Full retirement benefits for Social Security and general medical coverage via Medicare are put into an account where you can collect once you meet a certain age requirement to retire. The extra money when you retire, or in addition to paying your medical expenses, will be a benefit.
Tuesday, April 5, 2011
Do Parents Benefit by Paying Nannies On-The-Books?

www.tips-fb.com

Yesterday we listed some of the benefits for nannies that are paid legally (AKA on-the-books). 

Now that you know the importance of tax compliance, be sure to let your employer know they can benefit by by paying their nanny legally as well. 

Here are some benefits for families who pay their household employees legally: 

Using a Nanny Payroll Company is Tax Deductible: Any parent, regardless of their income, can deduct the expensive of using a payroll company from their taxes. 

Child Care Tax Credit: Regardless of a families combined income every family is eligible to receive a percentage in of the child care tax credit. A family who earns more than $43,000 per year can receive approximately 20% in a child care tax credit. On average tax savings are $600 per year for one child and $1,200 per year for families with two or more children. 

Dependant Care Flexible Spending Account: Families can set aside tax free dollars in an account, in the range of $2,500 to $5,000- that is set up thru their employer. Only one parent can do this through their job and if they choose this option- they are not eligible for the Child Care Tax Credit. 

References: 
4NannyTaxes.com 
Breedlove and Associates 
GTM Payroll Services