There is more to paying your household employee then just cutting them a paycheck each week. Taxes need to be paid (by the employer and employee) and insurance coverage may need to be in place, just to start.
The four key reasons to use a nanny payroll service are:
- Avoiding IRS Fines and Penalties for Non-Compliance
A payroll service will accurately prepare, submit and pay your quarterly and annual federal, state and local taxes on time to keep you in good graces with the IRS and state tax departments.
- Reducing Your Risk for an Audit or Lawsuit
Nothing can suck up your time and resources more than an IRS audit of your finances because you haven’t paid your nanny properly. Unless it’s getting sued by a disgruntled employee.
- Taking Advantage of Tax Breaks
You can get some of your money back in tax breaks. Specifically the Dependent Care Assistance Program (DCAP) and the Child and Dependent Care Tax Credit can potentially cut hundreds of dollars off your tax responsibility.
- Working with Happier Employees
By paying taxes and being compliant your employees receive a number of benefits. They now have an employment history and verifiable income, which can help when applying for loans or credit. They may be eligible for unemployment, disability, workers’ compensation social security and Medicare benefits.
It can be difficult even for the most organized household employer to keep track of changes to tax and insurance laws and regulations that vary by state, and even by town or city. Ignoring the law and paying your nanny “under the table” will mean even bigger headaches down the road.
This is where a nanny payroll service comes in and will help make sure you’re compliant, giving you peace of mind and freeing up your time to do things in life you enjoy. Our friends at GTM Payroll Services will take care of:
- Paycheck distribution via direct deposit or live check
- Electronic tax filings (or signature-ready returns)
- Year-end tax filings including Schedule H, W-2 and W-3.
- Compliance with federal and state tax, labor and wage laws