Read a good article today by Park Slope Patch writer Will Yakowicz.  A recent survey conducted by the Park Slope Parents organization indicates that 44% of the nannies who deserve overtime are not being paid at the legal time-and-a-half rate.  It's a good reminder to all nanny employers that overtime is required for all "non-exempt" workers -- even if you pay them on a salaried basis ("non-exempt" workers are a special protected class of worker under the Fair Labor Standards Act).

There are exceptions or special provisions in some states for live-in employees, but generally overtime must be paid for all hours over 40 in a 7-day work week and the overtime rate of pay must be at least 1.5 times the regular rate of pay.

Overtime violations can be extremely expensive because offenders are hit with back wages, back taxes, penalties, interest and attorney fees.  Worse, there is no statute of limitations so disgruntled former employees can file a wage dispute years after the fact.

The good news is it's a preventable problem.  Give us a quick call and one of our New Employer Orientation specialists will be happy to assess your situation and guide you safely past this and any other potential landmines. 

Considering a summer nanny?  If so, you may be pleasantly surprised at the tax consequences.  Most families with summer nannies (or any temporary or part-time caregiver) find that their tax breaks are greater than their tax costs -- so they actually come out ahead financially by putting their caregiver on the books.  For an estimate of your costs and tax breaks, visit our free Nanny Tax Calculator.

We're proud to be a supporter of National Nanny Training Day tomorrow, April 28, 2012, in 26 cities across the country (and a presenter in Austin).

We salute the 1,200+ childcare professionals who will give up their Saturday to learn and grow through continuing education -- and the hosting placement agencies who have put a lot of time and effort into each of the local events.  Thank you for your dedication and passion.  You're making a difference for the kids.

Happy Earth Day!  Even though we process more than 25,000 paystubs a month and almost 30,000 tax returns a quarter, we made the investment several years ago to be paperless (as paperless as we can be in the payroll and tax business).  In addition to doing our part for the planet, we're proud of the convenience that paperless paystubs, tax returns and document archival bring to our clients and their employees.

If you and another family employ a nanny in a NannyShare or CareShare situation, the state and federal tax agencies consider each family to be a separate employer.

That means each family has separate "nanny tax" obligations on their portion of the wages.  But, it also means each family is entitled to tax breaks on their portion of the wages.  Many families are pleasantly surprised to learn that their savings from the childcare tax breaks are greater than their employer taxes -- this is especially true in NannyShare, part-time and summer nanny situations.

To calculate your savings, enter your portion of the nanny's wages into our free Employer Budget Calculator. 

If you hired a caregiver for your dependent child (or parent) in 2011, you may be entitled to the Child or Dependent Care Tax Credit.  Qualifying expenses include wages paid to caregivers, taxes paid on those wages, fees paid to a placement agency to help you find the caregiver and any daycare or daycamp fees (overnight camps may not be included).

You can itemize up to $3,000 per dependent per year (up to a maximum of $6,000).  If you utilized a Flexible Spending Account, you'll have to deduct those funds from your total.

To qualify for the tax credit, your child(ren) must be under age 13 and you must pass the "work-related test," which means that the care expenses were necessary so that you and your spouse can work, look for work or go to school full-time. 

The expenses are itemized on Form 2441 and included with your federal income tax return, which is due April 17, 2012.  Click here for more information about tax breaks for care-related expenses.

We get a lot of questions about auto insurance when a nanny (or other type of household employee) is asked to drive as a regular part of their job.  How does coverage work?  Does it matter who's car the nanny uses?  Who's responsible in the event of an accident?

To answer these questions and provide some guidance on this complex issue, we wrote the attached article.  Feel free to call us if you have any additional questions.

Auto Insurance.pdf (528.10 kb)

With spring break and summer vacations coming up, many families will bring their nanny along to help care for the kids.  This always brings up interesting questions about how to handle the hours worked and travel expenses.

Even though it may be vacation to the family, federal law says it's work for the employee.  Families are required to pay for the nanny's travel, lodging and meal expenses and compensate her for all hours worked, including the time spent travelling as well as any time in which she has responsibility for the children -- even if she's doing it in a beautiful beach or mountain setting.

A Word of Warning: In the past few weeks, we've seen several phishing scams disguised as IRS inquiries.  The emails, supposedly from the IRS, urgently request personal and financial information related to your tax situation.  Some have contained threats that failure to respond may have severe consequences.

Please remember that the IRS never initiates contact with taxpayers asking for personal and financial information.  If you get what looks like an IRS email, do not open the attachments and forward the email to phishing@irs.gov. 

Late yesterday, a House-Senate committee finalized a deal to extend the payroll tax holiday through the end of 2012.  (The payroll tax holiday is a temporary reduction in the employee's portion of the Social Security tax from 6.2% to 4.2%.  Combined with the 1.45% Medicare tax, the combined FICA tax for employees is 5.65% -- rather than the usual 7.65%).

The reduced Social Security tax has been in effect since the beginning of 2011, but without a Congressional deal, the holiday would have been discontinued at the end of February.