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Thanks to our friends at HomePay, we are happy to share some helpful tax advice for household employers. Here is a brief overview of the laws for household employers in California:
When a family hires an individual to perform duties in or around their home, they are considered a “household employer.” The IRS views the worker — whether a nanny, health aide, housekeeper, gardener, cook/chef, personal assistant, estate manager, etc. — as an employee of the family. Misclassifying an employee as an “independent contractor” is considered tax evasion.
If a household employee is paid more than $2,100 in a calendar year, the household employer is required to withhold and remit payroll taxes to the state and the IRS. If a household pays an employee less than the threshold in a calendar year, payroll taxes are not required to be withheld and remitted; however, the household is still legally considered an employer and, therefore, must adhere to federal and state labor laws.
WHAT ARE THE FINANCIAL AND LEGAL RESPONSIBILITIES FOR HOUSEHOLD EMPLOYERS?
- Household employers are required to withhold taxes from their employee’s paycheck each pay period:
- Social Security & Medicare
- State Disability Insurance
- Federal Income Tax* (the amount withheld is based upon the employee’s withholding selections on Form W-4)
- State Income Tax* (the amount withheld is based upon the employee’s withholding selections)
*It is not legally required that income taxes be withheld. However, we strongly advise it so that the employee does not have a large tax burden at the end of the year.
- Household employers are required to pay federal and state employer taxes:
- Social Security & Medicare
- Federal Unemployment Insurance
- State Unemployment Insurance & Employment Training Tax
These taxes must be reported and remitted along with the employee’s tax withholdings throughout the year. The good news is there are tax breaks that can offset most — if not all — of the employer’s tax costs. For an estimate of your taxes — and your tax breaks — visit our free Employer Budget Calculator.
- Household employers are required to prepare and file special year-end paperwork. In addition to providing Form W-2 to each employee, household employers are required to file Form W-2 Copy A/Form W-3 with the Social Security Administration and file Schedule H with their federal income tax return (Form 1040).
- Household employers in California are required to carry Workers’ Compensation. Workers’ compensation is not part of the tax process; it’s an insurance policy that provides your nanny with financial assistance for lost wages and medical expenses in the event of a work-related injury or illness. It also provides legal protection since workers who accept benefits forfeit their right to sue — regardless of fault. Some level of workers’ compensation is usually provided in homeowners insurance. You should contact your insurance provider to see if your current plan is sufficient. If not, you can usually add an enhancement to cover your employee. If you have difficulty obtaining a policy, please contact us and we can guide you to a solution.
- Household employers must meet federal and state labor law requirements. Household employees must be paid overtime for hours worked over 40 in a 7-day workweek. The rate for overtime pay must be at least 1.5 times the regular hourly rate. According to Wage Order 15 and the Domestic Worker Bill of Rights, “personal attendants” (someone that spends at least 80% of their time caring for another individual, i.e. nannies and senior caregivers) must be paid overtime for all hours worked over 9 in a day and 40 in a week. For employees who are not personal attendants, overtime kicks in for hours over 8 worked in a day and 40 in a week. A separate set of rules apply for families that hire a live-in employee. Please call for details. Additionally, most household employers must provide at least 48 hours of paid sick time to their employee in Los Angeles.
THE BENEFITS OF COMPLIANCE
Compliance provides three significant benefits to families and their employees:
1) Audit & Lawsuit Prevention. Families who pay legally don’t have to worry about legal disputes levied by disgruntled former employees or IRS audits or charges of conspiring to commit tax evasion — a serious charge that carries fines up to $25,000 and potential jail time and loss of professional license. Think of it as insurance against tax and legal problems.
2) Tax Breaks. There is a common misperception that compliance is expensive. The truth is that most families — regardless of their income level — qualify for tax breaks that offset the majority of the employer tax costs. There are two tax breaks available to families: a) Dependent Care Accounts (aka Flexible Spending Accounts) allow families to pay for up to $5,000 of dependent care expenses using pre-tax dollars. Depending on the marginal tax rate, this can save household employers up to $2,300 each year; b) Child or Dependent Care Tax Credit (IRS Form 2441) allows families to itemize up to $3,000 per child per year (maximum of $6,000). For most families, this tax break will yield an annual savings of $600 for one child and $1,200 for two or more children. Note: Families who have access to a Dependent Care Account and have 2 or more children may be able to capitalize on both of these tax breaks — providing a savings of up to $2,500 per year.
3) Professional Benefits. When a family pays legally, the employee receives important short-term and long-term benefits, such as Social Security, Medicare, unemployment, healthcare subsidies disability and an ability to obtain loans/credit. These benefits and protections have a dramatic impact on the perceived professionalism of the position and, therefore, the quality and duration of the employment relationship.
Since 1992, we’ve been eliminating the work and worry for busy families by providing comprehensive management of payroll and taxes — as well as unlimited guidance and support from our team of tax and labor law experts — for a small, tax-deductible quarterly fee.
Our focus on the unique needs of household employers (rather than business employers, which have different obligations, different forms, different deadlines and different labor laws) has helped us create a simple, affordable service that has been heralded in numerous publications, including Kiplinger, Working Mother, Forbes, The Wall Street Journal, CPA Practice Advisor and The New York Times.
Here’s a summary of the compliance process for households — all of which we handle for our clients with guaranteed accuracy and timeliness:
- Register for federal and state tax accounts
- Complete and file a New Hire Report
- Calculate the correct amount of federal and state taxes to withhold each pay period
- Track gross pay, net pay, federal and state taxes withheld, and federal and state employer taxes
- Prepare state employment tax returns quarterly and remit both employer and employee taxes
- Prepare federal tax estimates four times per year and remit both employer and employee taxes
- Prepare year-end tax forms (W-2, W-3, Schedule H and State Annual Reconciliation)
- Respond to IRS and state requests/inquiries
- Monitor ever-changing household employment tax law
The IRS estimates that the entire compliance process takes the average individual about 50-55 hours per year. Let us take these tasks off your plate and eliminate all your work, worry and risk.
Please visit our company page to learn more! http://www.myhomepay.com/EducatedNannies
As a new school year is about to commence, it can be helpful for the whole family to get back into the swing of things ahead of time. Going back to school can be an exciting, enjoyable time if we are all ready for go time. Don’t forget to make room for fun in the process. Here are some valuable tips for you and your family!
Get them back into their bedtime routine
Dialogue with your kids about going back to school
Get yourself ready
Help get them excited for a new beginning
Rekindling last years friendships
Connecting with new teachers
We are so grateful for our team at HomePay! They are a wonderful resource for families to partner with in order to comply with California laws. Families are required to provide their employees with paid sick leave in California. While there are minimum requirements that must be met, the city of Los Angeles has sick leave laws that slightly alter state laws. There is some flexibility with how families can manage sick time. Here are the options!
Option A: Designated Sick Leave Policy – Upfront Method
This option gives your nanny access to all paid sick hours at the start of each year. Los Angeles law requires 48 hours of paid sick leave per year and any unused sick time is required to be carried over to the next year.
Pro: Sick time is available for your employee to use should they become sick early in the employment relationship. This ensures they will not come to work while ill. Unused sick time does not need to be paid out at termination. There is also a usage cap of 48 hours used annually.
Con: Since sick time is provided upfront, it could be used before it’s technically been earned. Carryover of unused hours is required from year-to-year.
Option B: Designated Sick Leave Policy – Accrual Method
This option allows your employee to earn, or “accrue,” paid sick leave at 1 hour for every 30 hours worked. Up to 48 hours of paid sick leave can be accrued per year.
Pro: Your employee “earns” sick time as the employment relationship grows. You may cap annual usage to 48 hours. Unused sick time does not need to be paid out at termination.
Con: Should your employee become sick prior to accruing enough hours, they may come to work ill. Carryover of unused hours is required from year-to-year.
Option C: General Paid Time Off
This option gives your employee a general amount of paid time off (PTO) that meets or exceeds Los Angeles’s sick leave requirements. This method works well for families planning to offer more PTO than the minimums listed above. Families may choose between the Upfront Method or Accrual Method. Unused Paid Time Off is required to be paid out at termination, while the unused sick leave is not.
Pro: This method works well if you are planning to offer paid time off in addition to the state and city-wide sick time requirements. This gives your employee the option to use their time off wisely.
Con: Any unused PTO needs to be paid out at termination.
Please visit our company page to learn more! http://www.myhomepay.com/EducatedNannies
By: Jenna Somich, Movement Specialist, BIRTHFIT Coach, RIE Foundations Student
When it comes to child care practices and philosophies, there is a lot out there. Many times following particular principles can feel overwhelming. Today, I would like to explore Respectful Child Care practices and discuss a few ways that you can put them into action.
Respectful Child Care is based on the idea that each child is born a complete, whole, and aware human, who is deserving of not only love, but also trust and respect. We seek to demonstrate our respect for each individual child with every interaction. Also, we acknowledge that each individual child is intelligent and knows himself or herself better than anyone else – including us! We learn about the child through sensitive observation and communication. It is a deep and intimate partnership that is ever growing! So where do we begin?
Provided below are some ways to put Respectful Child Care into action:
Respecting the Body:
- Slow Down: Then, slow down even more! Before you complete a caregiving activity, first ask the child if they are ready for that said task. Let the child know what you plan to do before you do it. Welcome their feedback regarding tasks, but remain firm in completing necessary caregiving activities in a calm and engaging manner. This allows the child to be an active participant in their care and sets the stage for independence in the future.
Example: “I see that your diaper needs a change. May we change it? I see that you are playing, but I would like to change your diaper now. I am going to pick you up.”
- Words Matter: Always use correct language and terminology for the body. Using correct and precise language leads to body awareness and sets the stage for autonomy, healthy boundaries, and consent.
Example: “I am going to take off your old diaper. Now, I will wipe your butt with this wipe (show the child). It may be cool. Are you ready? Let’s put a fresh diaper on you. Can you pick up your legs? Thank you for helping!”
- Movement Ownership: Remain mindful of innate movement development and cognitive development. Trust that each child is unique and will develop at their own pace and at their own time. Offer free movement opportunities on the floor or outside. When children are able to move freely and are not “taught” how to move, they move with grace, quality, and self-confidence!
Something to note: Placing children in a seated or standing position before they can achieve it on their own trains compensatory movement patterns, versus functional movement patterns. This would include holding them in that position or using equipment such as a bumbo seat, exersaucer, or walker. If you would like to learn more about this, I recommend the following article: On Their Own: How To Stop Interfering With Your Child’s Development
Respecting the Mind:
- Communicate Authentically: I touched on this a bit above, but I wanted to expand further. With Respectful Child Care, we believe that words are words and language is language. We don’t speak differently to newborns, infants, or toddlers. Also, we acknowledge that children deserve the truth. If we consider each child to be a whole human, our language and communication ought to demonstrate this as well. Using authentic language and honesty not only exposes children to a larger, more diverse vocabulary, it also feels freeing as the caregiver.
Example: “I can tell that you would like to pull my hair. I do not like how that feels. Can you please open your hand? It seems that you are having a hard time with this. I am going to help you open your hand. I am not going to let you pull my hair.”
- Observe and Trust: Allow the children to guide their own play. Children are born learners. When we allow them to self-initiate play, we will see that they are actually much more engaged in their activities. This builds intrinsic motivation. Support their passions and interests without projecting your wishes, wants, or fears on them.
Example: “I see that you are climbing the bench! I am going to stay close while you explore. You did it!”
- Consider Your Own Lenses: Remain mindful of the lenses that we bring into each situation and acknowledge that our personal experiences do not equal universal truths for all. A great tool that parents and caregivers can utilize to avoid placing their thoughts and experiences on children is “sensitive observation” and “sportscasting.”
Example: “I see that you would like the toy that your friend has. It seems that they are still playing with it and would like to play alone. Perhaps you could find another toy.”
Respecting the Spirit:
- Children Have A Voice: All humans deserve to be heard. Age does not inform this right. Openly invite, encourage, and acknowledge all feelings. Ask for clarification if you are unsure of how the child is feeling. Acknowledge when you are feeling unsure and let them know that you will do your best to support them. The key here is that support doesn’t mean “fix.” If we wish for our children to come to us with big challenges later in life, we must show them that their emotions and struggles are welcome, even at a young age and even if it feels like a small challenge to us. It is not small to them. Trust that they are doing their best with the tools they have and the stage of development that they are in.
Example: “I see that you are having a tough time with this. It seems you are very frustrated. I am not sure how to support you best, but I am here with you. What do you feel may help?”
- Learning Love Through Boundaries: Recognize your own boundaries so that you can help support your children in developing theirs. Children learn self-love and self-care by seeing it modeled to them throughout their lives via their parents and caregivers. Having healthy boundaries for yourself and those in your life teaches children that this is to be expected and honored.
Example: “I am having a tough time right now. I need a break. I am going to sit and be quiet and take 10 deep breaths.”
- Choose Empathy and Kindness: Openly and honestly say, “I am sorry” to children. This opens the door for our children to say “I am sorry” to others and understand that being “right” is not as important as showing up with empathy and kindness.
Example: “It seems that when I raised my voice that I really caught you off guard. I can’t imagine what that felt like for you. I am so sorry. Are you OK?”
In essence, Respectful Child Care practices are truly about adhering to the golden rule: treat all people, regardless of age, how you may wish to be treated. In many ways, you are not just parenting the children in your care, you are also parenting or re-parenting yourself and perhaps being that role model that you needed when you were young. It is not always an easy task and sometimes requires a leap of faith, but I believe it can change our world!
Here are some of my favorite resources on Respectful Childcare:
For more from Jenna Somich follow @jennasomich on Instagram!
Have you heard the theory, “No peanuts before the age of one!” New studies are showing that is not the case any longer. We had the opportunity to meet Dr. Katie Marks-Cogan and speak with her about food allergies in children. What a privilege this was and we learned so much about the company Ready, Set, Food! Please read what Dr. Marks-Cogan has to say about her experience with food allergies.
As a board-certified allergist, I’ve seen firsthand how families struggle with food allergies. Fortunately, recent landmark studies have shown that you can reduce your baby’s risk of developing common food allergies by feeding them allergenic foods early and consistently, starting between 4-11 months of age. But introducing babies to allergens can be challenging because many 4-11-month-olds are picky eaters. In fact, many infants aren’t developmentally ready for solid foods as early as 4 months of age.
To help make early allergen introduction easier for busy families, I’ve compiled 6 tips for food allergy prevention, based on findings from the recent studies.
- All Babies Can Benefit From Allergen Introduction
Food allergies are on the rise, with 1 in 10 suffering from a food allergy today. But over half of children with food allergies have no family history. That’s why early, sustained allergen introduction is recommended for all babies, regardless of family history. (If your baby has severe eczema, consult your pediatrician before feeding your baby allergenic foods, to determine if an allergy screening is required first).
- Start Early, Between 4-11 Months
Scientists believe that between 4-11 months of age, babies’ immune systems develop either a positive or negative response to food proteins. Consistently introducing allergenic foods during this critical window promotes a positive immune response to these foods, and helps reduce your baby’s risk for developing a food allergy. But delaying this allergen introduction may put your child at a greater risk for developing a food allergy, according to studies. So, start introducing allergens early, between 4-11 months of age.
- Make Sure Baby Is Healthy
When you’re ready to introduce allergens, choose a time when your baby is healthy. Also, make sure that an adult can closely monitor your baby for at least 2 hours, to watch for any signs of a reaction.
- Consistently Feed Your Baby Allergenic Foods
Feeding your baby allergenic foods only once or twice is not enough to help reduce their risk of developing a food allergy. Instead, your baby needs consistent exposure for their immune system to develop a positive response to these foods. In the landmark studies, infants consumed allergenic foods 2-7 times a week for 3-6+ months. (In fact, in the LEAP study, babies were exposed to allergens for 4 years.) Thus, make sure to feed your baby allergenic foods multiple times a week, for several months.
- Breastfeeding Alone Is Not Enough
Breastfeeding provides a wealth of benefits for your baby, but breastfeeding alone has not been conclusively proven to prevent food allergies. If you choose to breastfeed, you will also need to feed your baby allergenic foods early and often, to help reduce your baby’s risk of developing food allergies by up to 80%.
- Don’t Give Up!
As a mom, I know firsthand how challenging early, sustained allergen introduction can be. When my son David was 5 months old, I prepared an egg, peanut, and yogurt snacks for him to eat several times per week (peanut, egg, and milk comprise over 80% of all childhood food allergies). Unfortunately, this process was time-consuming and frustrating. Most of what I offered ended up either on my kitchen floor or on David’s bib. This difficult experience inspired me to find a solution that would make early and sustained allergen introduction easier for all families.
I worked with a team of physicians, leading allergy experts, and parents to create Ready, Set, Food!, an innovative system that can help reduce your baby’s risk of developing a food allergy by up to 80%.
Our gentle, guided system:
- Follows the precise dosing used in landmark food allergy prevention studies. This eliminates the stress of guessing and preparing the right amounts of allergens for your baby.
- Starts with a low dose to maximize safety, and then increases over time to a higher dose to maximize effectiveness.
- Introduces one new food at a time, based on pediatric guidelines.
- Dissolves into breastmilk, formula, or your baby’s favorite puree, making allergen introduction easy, even if your baby isn’t yet ready for solid foods.
- Contains only organic, non-GMO peanut, egg, and milk – no added sugar or artificial additives.
- Can help reduce the risk of developing peanut, egg, and milk allergies by up to 80%.
- Is recommended by 200+ pediatricians and allergists.
We’ve partnered with Educated Nannies to make allergen introduction even easier! Use the code EDUCATEDNANNIES20 to receive $20 off any Ready, Set, Food! subscription.
To learn more about Ready, Set, Food!, and to take advantage of this exclusive offer for the Educated Nannies community, visit their website here.
About Katie Marks-Cogan, M.D.: Dr. Marks-Cogan is board certified in Allergy/Immunology and Internal Medicine, and treats both pediatric and adult patients. Originally from Cleveland, Ohio, she received her M.D. with honors from the University of Maryland School of Medicine. She then completed her residency in Internal Medicine at Northwestern and a fellowship in Allergy/Immunology at the prestigious University of Pennsylvania and Children’s Hospital of Pennsylvania (CHOP). After finishing training, she moved to Southern California and currently works in private practice. She is Chief Allergist for Ready, Set, Food! She currently resides in Los Angeles with her husband, 3 year old son, and 8 month old daughter where she enjoys hiking, building LEGO castles with her son, and cooking with her family.
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