Nanny Tax

[liberty]

Just attended a webinar about Nanny Tax, the speaker mentioned for elder care, many people hire household employee did not realize not only the employer has to issue w-2(>2000 per year) and schedule H, FUTA, SUTA AND WORKER'S COMP are also needed. Is that true?
I have a client, his wife is very sick, this year he hired a helper and paid over 2000. I did not know other than w2 and schedule H, he also has to pay FUTA, SUTA and worker's comp. Can you take care all that in Jan 2018?Never had to deal with this before.

[TaxGuyBill]

FUTA is part of Schedule H.

SUTA and Worker's Compensation are State requirements, so you would need to confirm that your State requires those for Household Employees (I think most do) and if the State rules for SUTA payments/filings are different for Household Employees than 'regular' employees.

Worker's Compensation is insurance, so that has nothing to do with taxes. I would assume that should be done ASAP, or the employee is not covered.

[TaxGuyBill]

Remember that if you did not withhold the employee's portion of Soc Sec / Medicare taxes, the taxable income of the employee (as shown on the W2) is increased by those amounts.

If the employer wants to, they can still have the option to take the 'missed' Social Security/Medicare withholding from the next paychecks.

https://www.irs.gov/publications/p15#en_US_2017_publink1000202531

If the employer decides to pay the employee-portion of Social Security/Medicare taxes, Household Employees (and Agricultural Employees) have the unusual rule that amount would be added to Box 1 of the W-2, but not Boxes 3 or 5 (other 'regular' employees need to add it to all three Boxes, which sort-of requires a calculation).

https://www.irs.gov/publications/p15a#en_US_2017_publink1000169619

[TAXNJ]

Your question....

"Can you take care all that in Jan 2018?Never had to deal with this before."

Think you should look to see what 2017 taxes you mentioned were required to be filed quarterly/annually and file those returns based on the due dates (even if late past due).

[Rapid Robert]

If the employer decides to pay the employee-portion of Social Security/Medicare taxes, Household Employees (and Agricultural Employees) have the unusual rule that amount would be added to Box 1 of the W-2, but not Boxes 3 or 5 (other 'regular' employees need to add it to all three Boxes, which sort-of requires a calculation).

Thank you for bringing this point up. While the federal rule is probably there to avoid having to do gross-up calculations, your state may not follow that rule. See TheTaxBook topic "Gross-Up Computation" for the calculation details. Much simpler to do withholding from every paycheck.

For state purposes, any meals/lodging provided for employer's convenience, while maybe not subject to income tax, could still be subject to SUTA or other payroll taxes.

Some people just pay a service to handle all the payroll for them, including providing required paystubs to the employee, W-2 filings, Schedule H preparation, and making estimated tax payments to cover Schedule H taxes, along with state filings and payments.

[Sparky]

If the new tax plan, as being discussed, takes away the medical deduction, it will hurt many disabled individuals that use a household employee for their care.

[Burke]

If the employer decides to pay the employee-portion of Social Security/Medicare taxes, Household Employees (and Agricultural Employees) have the unusual rule that amount would be added to Box 1 of the W-2, but not Boxes 3 or 5. https://www.irs.gov/publications/p15...link1000169619

If this is done, how does the employee get credit for social security earnings on their record?

[TaxGuyBill]

As FEDUKE says, the normal wages still go in Boxes 3 and 5, but the EmployEE portion of FICA that the EmployER decides to pay only goes in Box 1. For 'normal' employees, if the employer pays the employees portion of FICA, Boxes 3 and 5 are also increased by that 'extra' amount paid.