"Nanny Tax" Service Provider Announces Charitable Giving Initiative

(Sterling VA) HomeWork Solutions Inc., a national "Nanny Tax" service provider, announces a new charitable giving initiative to help provide for the nation's neediest during these challenging economic times.

The company committed to contribute 1% of all revenues for year ending December 31, 2009 to community food banks across the nation.

Kathleen Webb, President of the Sterling VA-based company, explained the program by saying "while the company has always supported charitable organizations in our headquarters region (Washington DC), this program is designed to expand our support to food banks and other types of charitable organizations in Boston, NYC, San Francisco and Austin, Texas and to other communities where our clients reside."

The company expects to increase charitable donations fivefold over prior years.

The company is the nation's leading provider of payroll and payroll tax service for nannies, housekeepers and other domestic employees. Ms Webb went on to state: "We understand that many people choose not to pay into the Social Security/ Medicare/ Unemployment system for their nannies and other domestic workers. We feel that in these tough economic times our company should be rewarding those that do the right thing and to give back something on their behalf to their communities." Food banks were an obvious and immediate means to help in our clients' communities.

Ms Webb concluded; "Hopefully more corporations far more able than us will pick up on this initiative and find ways to either increase their charitable giving or direct it to provide an additional safety net for the individuals who have been hurt by the economic downturn."

For more information about HomeWork Solutions, Inc. and its "nanny tax" compliance services, please visit them online at http://www.4nannytaxes.com.

"Nanny Taxes" Can Apply to Eldercare

Thursday's Wall Street Journal issued a clear and well researched reminder to families that home health aides or elder caregivers employed by the family are subject to the "nanny taxes."

The term "nanny taxes" refers to the collective employment taxes (Social Security, Medicare, unemployment insurance) that household employers are obligated to pay when they employ a "domestic" (nanny, housekeeper, maid, elder caregiver, home health aide) to provide services in their private home.

Conservative estimates are that the US Treasury fails to collect nearly $7B a year in employment taxes for nannies. Factor in housekeepers, maids, and elder caregivers, and this number exceeds $30B. The Obama administration has stated its intention to close the "tax gap" by means of vigorous enforcement of the Internal Revenue Code and increased funding for tax collection activities.

Families avoiding the "nanny tax" are in jeopardy for more than simply the unpaid employment taxes. Families not paying their employment taxes are unable to obtain Worker's Compensation Insurance, to cover their liability if their employee is injured on the job. The financial implications of an employee injury that must be compensated by the family (instead of the insurance company) are enormous.

Much attention has been paid in recent months to household employer's risks when they lay off a nanny or housekeeper and that worker files for unemployment insurance. The Obama administration must aggressively collect taxes to fund it domestic agenda, and the nanny tax gap is relatively easy to identify and enforce.

Couple Jailed for Failure to File and Pay Employment Taxes

An Arkansas couple, in a highly unusual proceeding, was sentenced to jail time for failure to file and pay employment tax returns.

Mary I. Miller and her husband, Walter Randall Miller, pled guilty on March 24, 2003 to one count each of conspiring to defraud the United States by failing to file employment-tax returns or pay employment taxes from 1994 to 2002. The couple were both sentenced to five years of probation, conditioned on their agreement to a restitution agreement with the IRS.

In December 2006, the Miller's probation officer filed a petition to revoke the Miller's supervised release because they had not filed personal tax returns for 2005, had filed incomplete and inaccurate tax returns for the period 2000 - 2004, and had not paid their outstanding tax obligations to the IRS. The District Court revoked the Miller's supervised release and sentenced them to jail time of 14 months and 13 months, respectively, for failure to abide by the restitution agreement.

Nanny payroll taxes (employment taxes) are incorporated in the employer's personal Federal Income Tax Return, which is signed under penalties of perjury. Failure to report and pay the "nanny taxes" can be prosecuted as a felony, and consequently can jeopardize the careers of employers such as lawyers, physicians, accountants and all employers who require security clearances.

The Obama administration's intention is to pursue the tax gap (the gap between tax due and tax collected) with fervor. Their budget proposes a significant increase in IRS enforcement over the next several years. A single $35,000 a year nanny generates over $5000 in employment taxes, and will pay approximately $3000 in income taxes. If the estimates of 800,000 household workers being paid "under the table" are accurate, the "nanny tax" gap on nanny employment along is an astounding $6.7 BILLION per year! Factor in housekeepers, maids and elder caregivers and this number rises above $30B! These are significant numbers in times of tremendous revenue deficits.

Nanny Employers! Tougher Wage and Hour Enforcement Forecast

"The combination of an incoming administration more sympathetic to labor than its predecessor and the continuing economic crisis is likely to result in more aggressive wage and hour enforcement through both regulatory investigation and litigation" reports the Bureau of National Affairs.

Wage-Hour Litigation to Grow in 2009

Wage-Hour cases arise when an employee or former employee files a grievance related to the employer's payroll practices. In the "nanny world" or household employment, the most common wage-hour grievances surround compensation for the nanny's or housekeeper's overtime.

"There are many things we need to do," new Labor Secretary Hilda Solis said, including making sure that the money in the budget for DOL goes to the right places so that, among other things, the Wage and Hour division can enforce overtime provisions. It is expected that the Obama administration will provide greater funding for enforcement of Fair Labor Standards Act provisions.

Layoffs often spur more filings of wage and hour claims. The discharged nanny or housekeeper who seeks legal advice regarding their termination often hears that they have a potential wage and hour claim instead.

So how does the household employer protect himself from wage-hour claims?

HomeWork Solutions provides clients and visitors free online tools to help them properly craft an FLSA compliant written work agreement.

"Household workers are non-exempt under the FLSA" reports Kathleen Webb. "The written work agreement should always stipulate the household employee's compensation in hourly wage terms."

Employers are responsible for the maintenance of accurate, contemporaneous time sheets for their household workers. All live-out household workers, and some live-in nannies (depending on state law) are entitled to overtime compensation calculated as 1.5 times the hourly wage for hours worked in a week exceeding 40.

Nannies: Making Work Pay Tax Credit

The press is abuzz with information on the "Making Work Pay" tax credit of $400 for single tax payers and $800 for couples. New tax tables have been published that reduce your income tax withholding, effective April 1, 2009.

Not all nannies, however, will qualify for this credit. That's right, it doesn't apply to everyone! Married nannies with combined family income over $150K or single nannies with income over $75K (not many of you, but you are out there!) will find that the credit either phases out or disappears all together. If you find yourself in this circumstance, it might be wiser for you to keep your tax withholding rates at the original 2009 withholding rates, rather than risk adding a tax obligation to your return next April.

HomeWork Solutions' Nanny Tax Calculator has both sets of tax rates available online for calculations. The tax rates for nannies who are eligible for the Making Work Pay tax credit is the 2009 Apr. - Dec. selection and the original rates for nannies who may not be eligible for the credit is the 2009 Jan. - Mar. selection under "Year."

The tax credit in the "Making Work Pay" provision is refundable; if your employee does not want the change in his/her withholding now but is eventually eligible, s/he will receive a greater refund when the 2009 tax return is filed.