Tuesday, December 26, 2006
Domestic Employee Expenses: Document Retention
Household employers are required to retain some financial and tax documentation for preparation and justification of the annual Form 1040 Schedule H, "Household Employment Taxes."
HomeWork Solutions recommends that you organize and retain the following documentation on an annual basis:
1. Copies of cancelled checks to document the net amounts paid to your employee. If you pay via bank transfer, retain copies of the appropriate bank statements.
2. Calculation of the employees pay period wage and appropriate withholdings. HomeWork Solutions' clients will find this on their Customer Record. This documents the employee's gross wages.
3. Copies of all state unemployment tax returns.
4. Copies of all payments to the state unemployment taxing authority. The state payments are later transferred to the Form 1040 Schedule H.
In general, the IRS advises household employers to "Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out. "
More advice from the IRS
HomeWork Solutions recommends that you organize and retain the following documentation on an annual basis:
1. Copies of cancelled checks to document the net amounts paid to your employee. If you pay via bank transfer, retain copies of the appropriate bank statements.
2. Calculation of the employees pay period wage and appropriate withholdings. HomeWork Solutions' clients will find this on their Customer Record. This documents the employee's gross wages.
3. Copies of all state unemployment tax returns.
4. Copies of all payments to the state unemployment taxing authority. The state payments are later transferred to the Form 1040 Schedule H.
In general, the IRS advises household employers to "Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out. "
More advice from the IRS
Thursday, December 21, 2006
Confirming Employment Eligibility
Recent large-scale workplace raids have placed the issue of identity theft and fraudulent identification on the front page of newspapers nationwide.
At issue is the legal obligation of the employer to verify the US work eligibility of newly hired employees and apparent widespread document fraud in the illegal alien population.
How is the average household employer to verify the identity of the nanny they plan to hire?
All hiring families should insist on a complete criminal and sex offender background check before hiring and leaving the individual in sole charge of their children. A good background check will start with what is known as SSN Trace, or a Social Security Number Trace. This research relies on credit bureau databases, not the government, and will report all known names and addresses associated with this SSN over the prior 7 years.
An example might be Mary Smith, who was married two years ago.
Mary Smith 999-99-9999
Mary Smith, 123 Main Street, Leesburg VA, Loudoun 02/2006
Mary Smith, 321 Chestnut Street, Fairfax VA, Fairfax 01/2004
Mary Russell, 987 Oak Street, Bethesda MD, Montgomery 05/2002
This report would show both married and maiden names and the address at the time the record was generated. These records are created when there is a query on the individual credit record - such as an application for a car loan, apartment rental, cell phone credit, utility established, etc. They are extremely helpful to the employer not simply to verify identity, but also to verify other information provided on the job application.
The type of record to be concerned about might look like this:
Mary Smith 999-99-9999
John Jones, 123 Main Street, Leesburg VA, Loudoun 02/2006
Sue Johnson, 321 Chestnut Street, Fairfax VA, Fairfax 01/2004
Mary Smith, 789 First St. # 405, Brooklyn NY, Kings 11/2003
Mary Russell, 987 Oak Street, Bethesda MD, Montgomery 05/2002
The example above shows multiple names and addresses associated with the same number. This might indicate document fraud, or that the SSN of Mary Smith is being used for identity fraud. In either event, this is a clear red flag to the prospective employer and requires further investigation before the individual starts work.
As the recent raids on Swift have shown, document fraud is a problem for employers and the consequences of not doing a thorough background check can be severe. In the case of nannies, I would argue that document fraud is a minor reason to do the background check - your children and their safety are the biggest reason to do this!
The 4nannies.com website has an extensive FAQ on background checking, as well as offering the ability for families to order a professional background check easily and economically.
At issue is the legal obligation of the employer to verify the US work eligibility of newly hired employees and apparent widespread document fraud in the illegal alien population.
How is the average household employer to verify the identity of the nanny they plan to hire?
All hiring families should insist on a complete criminal and sex offender background check before hiring and leaving the individual in sole charge of their children. A good background check will start with what is known as SSN Trace, or a Social Security Number Trace. This research relies on credit bureau databases, not the government, and will report all known names and addresses associated with this SSN over the prior 7 years.
An example might be Mary Smith, who was married two years ago.
Mary Smith 999-99-9999
Mary Smith, 123 Main Street, Leesburg VA, Loudoun 02/2006
Mary Smith, 321 Chestnut Street, Fairfax VA, Fairfax 01/2004
Mary Russell, 987 Oak Street, Bethesda MD, Montgomery 05/2002
This report would show both married and maiden names and the address at the time the record was generated. These records are created when there is a query on the individual credit record - such as an application for a car loan, apartment rental, cell phone credit, utility established, etc. They are extremely helpful to the employer not simply to verify identity, but also to verify other information provided on the job application.
The type of record to be concerned about might look like this:
Mary Smith 999-99-9999
John Jones, 123 Main Street, Leesburg VA, Loudoun 02/2006
Sue Johnson, 321 Chestnut Street, Fairfax VA, Fairfax 01/2004
Mary Smith, 789 First St. # 405, Brooklyn NY, Kings 11/2003
Mary Russell, 987 Oak Street, Bethesda MD, Montgomery 05/2002
The example above shows multiple names and addresses associated with the same number. This might indicate document fraud, or that the SSN of Mary Smith is being used for identity fraud. In either event, this is a clear red flag to the prospective employer and requires further investigation before the individual starts work.
As the recent raids on Swift have shown, document fraud is a problem for employers and the consequences of not doing a thorough background check can be severe. In the case of nannies, I would argue that document fraud is a minor reason to do the background check - your children and their safety are the biggest reason to do this!
The 4nannies.com website has an extensive FAQ on background checking, as well as offering the ability for families to order a professional background check easily and economically.
Monday, December 04, 2006
San Francisco Mandates Paid Sick Leave
Employers within the City of San Francisco are trying to understand the implications of the new paid sick leave ordinance (Proposition F) passed by city voters last month.
The new law goes into effect February 5 and requires that all employers with 10 or fewer workers doing business within the city limits to offer as many as five paid sick days per year per employee. (Larger employers pay up to 9 days per year.) Employees accrue one hour of paid sick leave for every 30 hours worked, according to the ordinance.
Does the Paid Sick Leave Ordinance apply to Household Employers?
This question, along with many others, remains to be clarified. Proposition F clearly states it applies to all employers doing businesses in San Francisco; household employers are not businesses in the commonly understood sense. However, household employers do register with the State of California as employers, and are covered by state unemployment and disability insurance laws. The Minimum Wage Ordinance, enacted in 2004, defines a "small business" as "an employer for which fewer than ten (10) persons perform work for compensation within a given week." This definition, if applied to Proposition F, would seem to include household employers. The legislative intent was to apply the ordinance to ALL WORKERS within the City of San Francisco (See Paid Sick Leave Ordinance.)
Other open questions include how to track accrued sick leave for salaried workers who don't necessarily track their time precisely, particularly those (such as nannies) who might work more than 40 hours in a work week.
San Francisco has a history of using public policy to mandate minimum worker rights. In 2004, voters approved a minimum wage statue (currently $8.82/hour) that is among the highest in the country.
The new law goes into effect February 5 and requires that all employers with 10 or fewer workers doing business within the city limits to offer as many as five paid sick days per year per employee. (Larger employers pay up to 9 days per year.) Employees accrue one hour of paid sick leave for every 30 hours worked, according to the ordinance.
Does the Paid Sick Leave Ordinance apply to Household Employers?
This question, along with many others, remains to be clarified. Proposition F clearly states it applies to all employers doing businesses in San Francisco; household employers are not businesses in the commonly understood sense. However, household employers do register with the State of California as employers, and are covered by state unemployment and disability insurance laws. The Minimum Wage Ordinance, enacted in 2004, defines a "small business" as "an employer for which fewer than ten (10) persons perform work for compensation within a given week." This definition, if applied to Proposition F, would seem to include household employers. The legislative intent was to apply the ordinance to ALL WORKERS within the City of San Francisco (See Paid Sick Leave Ordinance.)
Other open questions include how to track accrued sick leave for salaried workers who don't necessarily track their time precisely, particularly those (such as nannies) who might work more than 40 hours in a work week.
San Francisco has a history of using public policy to mandate minimum worker rights. In 2004, voters approved a minimum wage statue (currently $8.82/hour) that is among the highest in the country.
