HomeWorkSolutions is the nation's leading preparer of "Nanny Tax" returns and an industry expert in payroll and compliance issues for any type of domestic employment situation. Our team of specialists provide both support and peace of mind to individual employers, CPA's and trust companies that require assistance with nanny payroll and nanny tax compliance.

Since 1993, we have assisted thousands of employers with "Nanny Tax" compliance. So if you employ a nanny, housekeeper, maid, chef, personal assistant, household manager, elder companion or any other type of domestic, our team will make sure you have all the information and support you need. Our programs range from full payroll services to nanny tax compliance services - plus we offer tips on how to hire and screen the right staff.

Our services and solutions are client friendly, supported by our robust, secure web-based client management and tax processing systems and WE GUARANTEE THE ACCURACY OF OUR WORK! Contact us today for more information or to get started.

Your Cleaning Lady and the Nanny Taxes

Latest Updates from HomeWork Solutions Inc.

Do you have a regular person who comes to your home to provide housekeeping, maid or cleaning services? Do you know that this individual is probably your employee under common law and the Internal Revenue Code?

Any individual whom you employ to provide services in your home whom you pay directly AND whose total payments in the calendar year meets the IRS household employment threshold ($1700 in 2011 and $1800 in 2012) must receive a W-2 from the employer (family) and the employer must pay the payroll taxes.

Household employment taxes - known as the "nanny taxes" - include:

• Social Security & Medicare Taxes (13.3% of Gross Wages - employer may collect 5.65% from the employee via deductions.)
• State Unemployment Taxes where required.
• Federal Unemployment Tax (FUTA) where required.

The employer is legally obligated to pay (remit) both employee and employer portions of Social Security and Medicare taxes. Should the employer fail to collect this tax from the employee via periodic payroll deductions, the employer remains responsible to remit or pay the tax to the IRS. The household employee CANNOT remit their share of Social Security and Medicare tax independent of the employer.

Many families try to classify their weekly (bi-weekly, monthly) cleaning ladies as independent contractors. In the vast majority of circumstances, this is a total legal fiction. This usually only works if the worker is properly incorporated, bonded and licensed in the trade and maintains "corporate formalities."

If you wish to avoid this obligation, we recommend that you engage a cleaning service. The service will decide who to send to your home to do the cleaning, and you will avoid any payroll tax obligations. Examples of such firms are Merry Maids, the Maid Brigade, XYZ Cleaning Services, Molly Maids - you can locate by Googling "home cleaning service YourTown YourState." When you hire a service, you make your payments to Cleaning Services Inc. or Cleaning Services LLC - and not to Mary Jones.

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Learn more! Date: Wed, 25 Jan 2012 13:38:00 GMT

Free G-5 Domestic Payroll Tax Compliance Guide Available

Latest Updates from HomeWork Solutions Inc.

The US Department of State has issued non-immigrant visas to the personal attendants, servants, and maids of certain diplomatic and non-governmental staff members under G-5, A-3 and NATO-7 visa categories for many years. Guidelines for the sponsoring staff members were very broad, and subject to interpretation by the various sponsoring organizations.

In September 2009 the US Department of State issued new guidelines and recommendations to sponsoring organizations intended to standardize the basic terms and conditions of the G-5 domestic's employment. They also, for the first time, placed responsibility for the enforcement of these guidelines squarely on the sponsoring organizations.

HomeWork Solutions provides payroll and payroll tax services to hundreds of G-4 staff members working for non-governmental organizations such as the United Nations and the World Bank when they sponsor a G-5 domestic. We are recognized subject matter experts. We recently published a free e-book, G-5 Domestic Payroll Quick Start Guide, to help the G-4 sponsor better understand their obligations.

Learn more! Date: Mon, 23 Jan 2012 13:18:00 GMT

Risky Business - Skipping the Nanny Tax

Latest Updates from HomeWork Solutions Inc.

IRS data places "nanny tax" compliance (declaration by families of their household payroll) at about 20%. Household employment experts believe even this number is optimistic.  Looking at these statistics, a new household employer has to think that just ignoring this complicated and expensive issue is relatively risk free. What these numbers don't illustrate is the steadily increasing political pressure on the IRS to collect revenue, and the relatively low hanging fruit the "nanny taxes" present. Add to this the very real possibility that the elder care giver or nanny may file for unemployment benefits when the job ends, and the risk evaluation changes dramatically.

The "nanny taxes" are not just for nannies! If you hire someone to provide personal services in your private home - a housekeeper, house manager, maid, or elder care giver - you too are likely to fall under rules surrounding the "nanny taxes."

In today's economy housekeepers and nannies are finding that good jobs take longer to secure. The household who let's their off-the-books household staff go, for whatever reason, should be seriously concerned about their former employee filing an unemployment claim. The maid who was perfectly content to receive tax fee income experiences a reality check when they have no income for weeks, or months. Suddenly, filing an unemployment claim seems the only option to avoid eviction or to put food on the table. Once that claim has been filed, the whistle is blown on the former household employer. Since state unemployment systems share this information with the IRS, everyone is on notice that the family employed the nanny and that there are no tax returns on file.

This is when the laws of unintended consequences come into play.

The financial risk to the household in these cases is significant. The household employer has the obligation for remittance of the payroll taxes, not the nanny. A housekeeper who was being paid $500 cash has little or no income tax obligation on her wage - her risks for coming forward are nominal, and insignificant in the face of her lost earnings and need for unemployment benefits. The family, however, has approximately a $3700 back tax bill for just one year - and that is before penalties, interest, and the cost for professional assistance amending previously filed income tax returns. Consider for a minute that in metro areas a nanny's cash wage is often $600 - $800 a week or more and the liability grows substantially.

The family considering employing any household staff - nanny, housekeeper, maid, elder care giver - and skipping the household payroll taxes needs to seriously consider their risk tolerance.

Learn more! Date: Tue, 17 Jan 2012 12:50:00 GMT

Complete "NANNY TAXES" BLOG

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