Mileage Reimbursement & Fringe Benefits

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Nanny Fringe Benefits & Mileage Reimbursement Rates

Internal Revenue Service Publication 15B: Employer's Tax Guide to Fringe Benefits is available as formal IRS guidance on non-taxable fringe benefits.

Mileage Reimbursement Rate

For reimbursement of nanny's business use of her personal vehicle. This will include such things as transporting your child(ren) to/from school or activities, errands, shopping, etc. It does not include the nanny's commuting mileage to/from her home to her place of employment.

HomeWork Solutions, Inc., June 22, 2011

The standard mileage rate is established by the IRS, and the nontaxable amount that is used by employers to reimburse employees for the business use of their personal automobiles. This is the reimbursement rate guideline that most nanny employers utilize to determine the mileage reimbursement for a nanny who uses her personal vehicle to transport the children and run errands. The rate typically adjusts once per year, with announcements made in November for the next year's rate.

Insurance Benefits: The IRS will allow the employer to pay the cost of an medical or health insurance plan for employees, including an employee's spouse and dependents. These premium payments are not wages and are not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. Generally, this exclusion also applies to qualified long-term care insurance contracts. To qualify, this benefit must be offered to all similarly situated employees. The employer should write the premium payment check directly to the insurer.

For tax years 2010 - 2013, some household employers may be eligible for a tax credit for employer paid health insurance premiums. Small Business Health Care Tax Credit: Frequently Asked Questions

Social Security Wage Base: The Social Security wage base for 2009 - 2011 is $106,500. The 2008 wage base was $102,000, and $97,500 in 2007 . The maximum amount an employee can have withheld for Social Security tax in 2009 and 2010 is $6603. For 2011 ONLY, the employee contribution to Social Security via payroll deductions is reduced to 4.2%, or no more than $4473 in the year. Employers must contribute of the employee's gross pay 6.2% for Social Security taxes up to the wage base, and 1.45% for Medicare (which has no wage base).

Qualified Transportation Fringe Benefit: $120 per month for 2011 public transit passes Under the American Recovery and Reinvestment Act of 2009 (ARRA), for March 2009 through December 31, 2010, the tax-free amount an employer may reimburse an employee monthly under a qualified transportation fringe benefit plan increased to $230. The amount was $120.00 in January-February 2009. The benefit historically: $115 in 2008; $110 in 2007. See Related Article
INTERNAL REVENUE SERVICE: MORE INFORMATION

Educational Assistance: The annual tax free amount for employer-provided educational assistance is $5,250 for 2006 - 2011 and now also applies to graduate-level course work. According to the IRS, "Employers offering tax-free educational assistance are required to have a written plan describing the benefit and the terms under which it is available." (Notice 97-60 Exclusion For Employer-Provided Educational Assistance). Translation: put it in writing in your written work agreement. Non-discrimination tests apply. An employer may pay for any form of instruction or training that improves or develops an individual's capabilities, whether or not job-related or part of a degree program under a qualified education assistance program without defeating the non-taxable status of the benefit supplied to the employee. MORE INFORMATION

 Internal Revenue Service Publication 15B: Employer's Tax Guide to Fringe Benefits