Nanny Tax & Payroll Updates! HomeWork Solutions

President Bush signed quietly into law the first increase of the US minimum wage since 1997 on May 25, 2007. Presented to the President as part of the Iraq War Supplemental, the legislation will raise the minimum wage to $7.25 per hour over two years.

The minimum hourly rate will rise to $5.85 an hour effective July 24, 2007 (60 days after the bill's signing). A year later, the minimum wage increases to $6.55 an hour, and in July 2009 will reach the final $7.25.

Labels: minimum wage rises

Eileen Mayer, IRS Chief of Criminal Investigation, recently sat on a taxation panel at a meeting of the American Bar Association. She reported that Employment Tax cases are "a very high priority for the IRS."

Mayer reported that employment tax enforcement cases opened are up 36% over the same period in 2006. Convictions are resulting in average prison sentences of 19 months. The IRS is utilizing tax code Section 7202, which makes it a felony to willfully fail to collect or pay over tax to the government. Other charges include tax evasion, filing of false returns and conspiracy.

The Justice Department's Dana Boente, describing the dishonesty of many defendants, joked that the government is unlikely to believe the non-compliance was because the taxpayer didn't understand the tax code, especially when they are "driving a Ferrari."

Paying cash wages off the books is being pursued aggressively according to both Mayer and Boente.

SOURCE: BNA Payroll Administration Guide May 16, 2007.

Labels: payroll tax enforcement, payroll tax evasion

The Organisation for Economic Co-operation and Development (OECD) recently published its annual report, Taxing Wages. This report evaluates the differences between labor costs to individual employers and the net take home pay to employees in 30 member countries. (oecd.org)

The United States fared rather well in the analysis.

In Belgium, Germany, Hungrary and France, more than 50% of the employer's labor costs went to satisfy taxes. In the UK, 33.9% of the employer's labor costs went to satisfy taxation, in Canada this number was 32.1%. The United States placed 22nd of the 30 countries studied, with 28.9%, followed closely by Japan (28.8%) and Ireland (28.6%).

Labels: tax wedge, wage taxation, wage taxes

I blogged on April 2, 2007 on the new, nationwide searches available via our affiliate 4nannies.com to aid in background checking a nanny or other household worker.

Verifications Inc., the vendor who provides 4nannies.com's background check services, has an excellent article titled Using Locator Devices to Enhance a Criminal Record Search that details the strengths and weaknesses of the national records searches.

4nannies.com strongly encourages families to utilize the locator devices in conjunction with in-court records searches, never instead of in-court records searches.

Families - always thoroughly investigate before you hire! Your children are depending it you.

Labels: nanny background check, nanny background investigation, nanny screening services

A recent case before the California Appeals Court for the Fourth Appellate District highlights the important responsibility an employer has to maintain accurate and contemporaneous time records for employee work and compensation.

A former employee sued (and ultimately did not prevail) for back wages alleging unpaid overtime. The courts statement, however, is a cautionary note to employers. "If an employer fails to keep the required time records, an employee may prove an overtime claim by offering credible evidence that he worked but was not paid," the court said.

HomeWork Solutions strongly encourages clients to utilize a Nanny Log to track the nanny's hours worked. A Nanny Log also facilitates communication between employer and employee and is an excellent employee management tool.

Best practices include:

• A written work agreement that details compensation stated in hourly wage terms


• Accurate, contemporaneous time tracking


• Payroll records that itemize gross wages, total hours worked, net wages, deductions, and dates covered in the pay period

Employer's looking for a more automated time tracking solution can find free sources on the web. One such resource is OnTheClock.com who offer free time tracking for employers with one or two employees.

Labels: hourly pay records, nanny time cards, nanny time tracking

The Social Security Administration began issuing newly formatted Social Security Cards in April 2007.

The new cards will now separate the first and last names on two different lines to help eliminate confusion between the two. Additional, the issue date will be included on the card.

All versions of cards issued before April 2007 will remain valid.