The Legal Review by Breedlove and Associates - Employment Taxes

A Complimentary Resource from © 2014 Breedlove & Associates, LLC. Breedlove & Associates

When it comes to taxes, the tiniest of details can be the difference between smooth sailing and a giant headache. With the back-to-school hiring rush in full swing, now is a great time to familiarize yourself with a few household employment details (also known as the "nanny taxes," although the payroll, tax and labor laws apply to all types of domestic workers employed by a family). This particular household employment case highlights how a family's personal income tax return became much more complicated after the wrong tax returns were filed.

The Mistake

The Richmond family hired a nanny last year and utilized a local CPA to handle their tax return filings. The CPA made all the family's quarterly state tax payments on their behalf and prepared their year-end documents, but also made quarterly federal tax payments for the family using Form 941.

The Law

The use of Form 941 is for remitting federal quarterly tax payments for commercial businesses. But household employers are not commercial businesses, and according to IRS Publication 926, they should make estimated tax payments using the federal 1040 Estimated Payment schedule. The only exceptions to this rule are if the family already owns a business as a sole proprietor or if they operate a for-profit farm. These estimated payments cover the Social Security & Medicare (FICA) and federal income taxes withheld from an employee as well as the employer's share of FICA and federal unemployment insurance taxes. The taxes are remitted to the IRS in mid-April, mid-June, mid-September and mid-January using Form 1040-ES.

The Mess

When the Richmond's CPA filed their personal income tax return and Schedule H this year, the IRS showed the family owed additional taxes coincidentally equaling the amount of the taxes they sent in on their 941 returns. The family contacted the IRS and an agent informed them of their error in using Form 941. Unfortunately, the Richmonds were already past the 1st quarter of 2014 when they spoke to the agent and their CPA had filed another Form 941 on their behalf. 

The Outcome

The family ultimately had to file amended 941 returns for all of 2013 and the 1st quarter of 2014 with instructions to transfer those tax payments to their personal taxes using their Social Security number. This allowed the Richmonds to amend their 2013 personal income tax return and get on the 1040 Estimated Payment schedule for the rest of the 2014. While ultimately the family's CPA had all the family's payroll and tax information correct from the beginning, the mistake of filing a Form 941 instead of Form 1040-ES resulted in hours of additional work and a frustrated client. 

Household employment is a highly-nuanced section of the tax code with numerous exceptions and exemptions that don't apply to commercial enterprises. The state and federal complexities, combined with the unique labor law obligations, can create risk for families and liability for their advisors. That's why we were created as a comprehensive "nanny tax" specialist. Founded in 1992, we provide families in all 50 states with an affordable, "no-work, no-worry" solution to household employment payroll, tax and HR obligations.

Quick Tax Facts:

$1,900: Annual wage threshold for Social Security & Medicare (FICA) reporting in 2014

$1,000: Quarterly wage threshold for Unemployment reporting (some state thresholds are lower)

$2,500: Total childcare tax breaks available for families

1.5: Overtime rate of pay when work exceeds 40 hours

$0.56: Federal mileage reimbursement rate in 2014

$7.25: Federal minimum wage (some state rates are higher)

$2: Approximate daily cost to have HomePay by Breedlove handle all payroll and tax compliance duties with no work and no worry.

General Rules for Domestic Employees

If you have ever considered hiring a domestic employee, whether that be a live-in nanny, housekeeper or chef, I am sure you have had a few questions. The Labor Laws that apply to the domestic arena are pretty similar to the 'typical' employment situation and the people working in private homes deserve the same rights as someone working in a large corporation. 

INDEPENDENT CONTRACTORS?

No!! Domestics in the state of California are NOT Independent Contractors, they are, in fact, W2 employees. 

MINIMUM WAGE?

Yes! Domestic employees must make at least minimum wage for all hours worked. In California, the minimum wage is currently $9.00/hour. 

OVERTIME? 

Yes!! The rules for overtime do apply to Domestic employees in the state of California. If your employee works more than an 8 hours shift they are required to be paid 1.5 times their wage (ex: Katie worked 11 hours at $10.00/hr. She would receive 8 hours at $10.00/hr = $80.00 and 3 hours at 1.5 x $10.00 = $15.00 x 3 = $45.00. So this situation would equal a total of $125.00 for her day). This however, does NOT apply to live-in domestics. 

I hope this answered a few common questions we are frequently asked here at Seaside Staffing :) Feel free to visit the U.S. Department of Labor for more information! 

Rules for Hiring a Nanny AND a Housekeeper

We have been receiving a slue clients coming to us looking for Nanny/Housekeepers.  Having a staff of ladies coming in and out throughout the week is becoming very unappealing for families and so they are choosing to combine a few jobs into one.  

This is a very doable task, however, there are a few guidelines we feel are necessary to note if this is something you are looking for. 

1) Be realistic.  Sorry folks, no one is able to clean a nursery at the snap of a finger like Mary Poppins.  Trust me, I wish it was possible.  Unfortunately, no can do.  SO, make sure your list of duties is clearly listed and laid out for your Nanny/Housekeeper.  She is going to need TIME to complete everything on the list while also taking care of your little one.   

2) Schedule properly.  We have found a great technique for scheduling is to have the Nanny be strictly "Nanny" for however many days you require, and then have her come in one day and be "Housekeeper".  This way, all of her attention is set on the task at hand and she is not overwhelmed.  Of course, when she has her Nanny cap on, she will attend to light cleaning and picking up but save the deep cleaning for a day when she can have minimal distractions.  

3) Quality.  Remember, hiring a Nanny/Housekeeper is a COMPROMISE.  This position attracts a different type of candidate.  You will probably not get the same level of education and certifications as a you would if you hired a professional Nanny.  Keep this in mind. 

4) Money.  In the long run, you will most likely be saving money by hiring a Nanny/Housekeeper.  You are combining a few jobs into one paycheck.  However, you must be sure to compensate your new hire properly.  Our average Nanny makes about 18-20 hourly as a part of this agency.  A Housekeeper makes around 25 hourly and a Chef, even more, at 45-65 hourly.  So you want to take all of these numbers into account when discussing money.  We have found that paying around 25 hourly (net) seems to work out well for our families as well as our candidates.  Always, ALWAYS properly take care of your help :) 

You are hiring someone to be a member of your family and we understand it can be a major decision and process.  Always ask detailed interview questions and go through the proper security measures to ensure safety and harmony when finding your next Nanny, Housekeeper, Chef etc.  Good luck on the search!! 

A Little Reminder About Leaving Kids & Pets In Cars

DO NOT DO IT! 

There is no reason to leave a child or pet in your car for ANY period of time! On a day that is just 72 degrees Fahrenheit, the temperature [inside a car] can increase by 30 to 40 degrees in an hour, and 70% of this increase occurs the first 30 minutes.  In an hour, car temperatures can reach up to 140 degrees on a 95 degree day!! 

More than 600 U.S. children have died that way since 1990, according to the nonprofit safety group Kids and Cars.  Even with the windows cracked, there is no safe amount of time to leave your child in a hot car.

The same goes for pets.  You may think you are just going to run into the grocery store and grab a few items...what happens when you see your old friend from college and start chatting?  Before you know it, 25 minutes have gone by and poor little Sparky is experiencing the beginning stages of heat stroke. 

If you see a child alone in a vehicle call 911 immediately!!  The same goes for a pet.  And always make arrangements if you have to go somewhere that the kids/pets cannot come with you. 

Stay cool this summer!! :) 

You'll Never Guess Who This Little Boy's Best Friend Is...

After watching this short video, I fell in love with this story. What an unlikely friendship between this adorable little boy and just the cutest old man. 

This should encourage parents to get those kiddos outside and active! You never know who they are going to meet and learn from. 

Happy Monday!!

http://blog.petflow.com/boy-sneaks-into-yard/

The Do's and Dont's of Quitting a Job

A friend once told me "you want to leave your job the way you want to start your new one". 

Leaving a job with no explanation, over text message and/or without a proper three days notice is unacceptable. 

There is no easy way to tell your employer you want to quit your job. However, burning bridges should NEVER be an option. One should leave a job with grace and poise. Whether you are working as a hostess at Olive Garden or a Senior Level Executive at a company, there are a few crucial do's and dont's to live by. 

FORBES has a brilliant list of important rules to follow when leaving a current job. If you can follow this list, you are certain to leave with a lasting relationship with your previous employer and hopefully get that excellent letter of recommendation for your next venture!

Articulating The Goodbye

Do: Briefly explain your reason for leaving. Career experts advise simply saying that you’ve accepted another offer that you hope will further your career.

Don’t: Offer too much detail about the new position or your decision to leave. Your manager may misinterpret it or use it to try to persuade you to stay.

Mastering The Countdown

Do: Provide as much notice as possible and as is required. Two weeks is standard, but be aware of company policy; some march workers out the same day. In your remaining time on the job, maintain your enthusiasm and work ethic.

Don’t: Fake your way through the time that’s left. Career experts warn that managers will remember your final long lunches, early departures and general distraction. If you want strong recommendations, keep up the same pace.

Handling The Counter

Do: Be prepared for a counter offer, and if uninterested, turn it down graciously. Career experts suggest saying that you appreciate the offer but feel the other position is in line with your career goals.

Don’t: Insult the employer by tossing out a line like “it’s too little too late” or “it’s not about the money.” You’d be wise to bite your tongue. At the same time, don’t forget why you’ve decided to leave or be lured back into an unsatisfying experience.

Refining The Tone

Do: In speaking with managers, colleagues and subordinates, always focus on the positive experiences you’ve had with the company.

Don’t: Burn bridges by being overly negative, lying or taunting colleagues with news of your next position.

Training The Replacement

Do: Agree to help hire or train someone for the position in your remaining time on the job. It’s ultimately to your benefit to enable a smooth transition, making it less likely that you’ll be contacted after you’ve left.

Don’t: Rewrite the training manual or give too much of your time over to it. Says career coach Yusuf Wilson, “It is critically important to follow through on agreements. Do not over promise, but over deliver.”

Fielding Questions

Do: Let your employer or replacement know you’re willing to answer a few questions that arise after you’ve gone. Workplace expert Lynn Taylor says two e-mails or phone calls would be standard, and it’s courteous to respond as best you can.

Don’t: Give away too much of your time. Taylor advises against becoming a free resource to your former employer and says, “You must set limits.” If questions continue, begin by slowing your response time and consider offering your services as a consultant.

Informing Clients

Do: Seek the guidance of a manager on how to inform clients of the transition. They likely will approve phrasing and an e-mail notification.

Don’t: Disregard contract clauses that bar you from taking clients or proprietary information with you. Your actions could come back to haunt you.

Remembering The Details

Do: Pay attention to details like e-mail and phone messages. Where will they be directed after you’ve left? Carefully organize all hard and soft files so that important documents will be easy to find.

Don’t: Leave your physical space in a mess. If you don’t want to carry something home, toss it. Otherwise you may cause unnecessary frustration or contempt.

Writing The Transition Document

Do: Organize and write down the status of all projects and responsibilities that you are accountable for, including the appropriate contacts on each.

Don’t: Verbally give a manager the rundown. Taylor advises that you put everything in writing, so that your replacement can easily navigate projects once you’re gone.

Wrapping Up Relationships

Do: Answer all questions and offer feedback to subordinates, and remember to acknowledge those you worked with before leaving.

Don’t: Run out on subordinates without making sure you’ve left them in a position to succeed or follow up with you.

10 Things Your Nanny Wont Tell You

Thought this was an interesting article I found on 

Marketwatch, 

very interesting!  

Some of it I agree with and some of the things, I don't, but curious, what your thoughts are?  Send us a note and let us know!

info@seasidestaffingcompany.com

Don't Forget to Visit Us Online!

www.seasidestaffingcompany.com

Cutest Easter Egg Chickens!

Easter is coming up and I was looking for little creative ideas to do with the little ones and you just can’t go wrong with Martha Stewart’s little creatures! These are just the cutest little chickens, check out other awesome creative ideas on her webpage!

http://www.marthastewart.com/270102/egg-creatures?czone=holiday%2Feaster-center%2Feaster-crafts-and-decor&gallery=274333&slide=270102&center=276968

Lets Get Fun With Nutrition!

As parents, we have to learn to juggle so many things at once that sometimes we don't have time to think about cooking healthy meals. It is so much easier to open up a box of mac and cheese than it is to think about ways to make broccoli interesting to children. But as a parent it our responsibility to instill good habits as children so that they can grow to be healthy adults.

 Found this really great article on SF Gate about how to make nutrition fun for children! They had awesome ideas like grocery store scavenger hunts and edible art to make heathy foods more appealing to children. If you are having a hard time getting your little ones to get interested in their greens, it wouldn't hurt to give this a try. Plus, you will both gain a great bonding experience at the end of the day. 

For more details go to: 

http://healthyeating.sfgate.com/nutrition-game-kids-6274.html

Gardening with Children

I stumbled upon this cute idea on how to involve children in growing something from ground up and educating them about responsibility and the basic life cycles. This activity is for children ages 2 and up and as usual, it is important to always monitor them when they are experiencing things they are not familiar with. Enjoy this great way of bonding with your little one. 

For more information and details visit their awesome website : 

http://www.parents.com/fun/arts-crafts/kid/fun-for-little-ones/#page=12

Last Minute Baking Ideas for Kids!

Great Blog for Cooking and Baking with Your Children!

I have not seen such cute ideas in a while!  This Blog is great, as it accesses many different ideas from all over the web.

Happy Valentines Day!!

COMING SOON~

The Sister Companies 

of 

Seaside Staffing Agency

Written By A Preschool Teacher (Found on Facebook, no author to quote, unfortunately!)

                        Written by a Pre-School Teacher    

                             – It says it all!

I was on a parenting bulletin board recently and read a post by a mother who was worried that her 4 1/2 year old did not know enough. “What should a 4 year old know?” she asked.

Most of the answers left me not only saddened but pretty soundly annoyed. One mom posted a laundry list of all of the things her son knew. Counting to 100, planets, how to write his first and last name, and on and on. Others chimed in with how much more their children already knew, some who were only three. A few posted URL’s to lists of what each age should know. The fewest yet said that each child develops at his own pace and not to worry.

It bothered me greatly to see these mothers responding to a worried mom by adding to her concern, with lists of all the things their children could do that hers couldn’t. We are such a competitive culture that even our pre-schoolers have become trophies and bragging rights. Childhood shouldn’t be a race.
So here, I offer my list of what a 4 year old should know.
She should know that she is loved wholly and unconditionally, all of the time.

He should know that he is safe and he should know how to keep himself safe in public, with others, and in varied situations. He should know that he can trust his instincts about people and that he never has to do something that doesn’t feel right, no matter who is asking. He should know his personal rights and that his family will back them up.

She should know how to laugh, act silly, be goofy and use her imagination. She should know that it is always okay to paint the sky orange and give cats 6 legs.

He should know his own interests and be encouraged to follow them. If he could care less about learning his numbers, his parents should realize he’ll learn them accidentally soon enough and let him immerse himself instead in rocket ships, drawing, dinosaurs or playing in the mud.

She should know that the world is magical and that so is she. She should know that she’s wonderful, brilliant, creative, compassionate and marvelous. She should know that it’s just as worthy to spend the day outside making daisy chains, mud pies and fairy houses as it is to practice phonics. Scratch that– way more worthy.

But more important, here’s what parents need to know.
That every child learns to walk, talk, read and do algebra at his own pace and that it will have no bearing on how well he walks, talks, reads or does algebra.

That the single biggest predictor of high academic achievement and high ACT scores is reading to children. Not flash cards, not workbooks, not fancy preschools, not blinking toys or computers, but mom or dad taking the time every day or night (or both!) to sit and read them wonderful books.

That being the smartest or most accomplished kid in class has never had any bearing on being the happiest. We are so caught up in trying to give our children “advantages” that we’re giving them lives as multi-tasked and stressful as ours. One of the biggest advantages we can give our children is a simple, carefree childhood.

Our children deserve to be surrounded by books, nature, art supplies and the freedom to explore them. Most of us could get rid of 90% of our children’s toys and they wouldn’t be missed, but some things are important– building toys like Lego’s and blocks, creative toys like all types of art materials (good stuff), musical instruments (real ones and multicultural ones), dress up clothes and books, books, books. (Incidentally, much of this can be picked up quite cheaply at thrift shops.) They need to have the freedom to explore with these things too– to play with scoops of dried beans in the high chair (supervised, of course), to knead bread and make messes, to use paint and play dough and glitter at the kitchen table while we make supper even though it gets everywhere, to have a spot in the yard where it’s absolutely fine to dig up all the grass and make a mud pit.

Our children need more of us. We have become so good at saying that we need to take care of ourselves that some of us have used it as an excuse to have the rest of the world take care of our kids. Yes, we all need undisturbed baths, time with friends, sanity breaks and an occasional life outside of parenthood. But we live in a time when parenting magazines recommend trying to commit to 10 minutes a day with each child and scheduling one Saturday a month as family day. That’s not okay!

Our children do not need Nintendo, Wii, PlayStation, computers, after school activities, ballet lessons, play groups and soccer practice nearly as much as they need US.

They need fathers who sit and listen to their days, mothers who join in and make crafts with them, parents who take the time to read them stories and act like idiots with them. They need us to take walks with them and not mind the .1 MPH pace of a toddler on a spring night. They deserve to help us make supper even though it takes twice as long and makes it twice as much work. They deserve to know that they’re a priority for us and that we truly love to be with them.