First, let me be clear that I’m not a CPA. For specific tax advice, you’ll need to speak with an expert. However, I’m happy to refer you to a trusted tax professional.
With that understanding, I want to help you get organized and so that you have the proper documentation for your tax situation.
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Household Employees
Hiring a household employee such as a nanny or someone to help care for your aging parents comes with tax requirements. Often, people will opt to pay their household staff under the table and think of it as a win-win.
Unfortunately, doing so is illegal and could cost you up to $25,000 in fines and penalties.
No one wants that!
Instead, you need to properly pay them and pay any employer taxes associated with having them work for you. Additionally, having full or part-time caregiver could be used as a medical deduction and reduce your burden at year-end.
Read the IRS guidelines for employment taxes for household employees to understand the legal requirements you’re responsible for.
➡️ Expenses need to be tracked and categorized for easy retrieval at tax time. Thankfully, there is software available to make this process easier – Business Expense Tracking Software Blog Post
Common Tax Mistakes
Staying compliant in your taxes means avoiding mistakes many people make when they file their taxes. Don’t forget these considerations when you are preparing your taxes:
- Missing tax filing deadlines
- Misclassifying workers
- Forgetting to file state or local taxes
- Not registering in a new state
- Failing to update employee withholdings
🌟 As the tax season rolls around, it’s essential to be well-prepared, regardless of the year – Navigating Tax Season: Timeless Tips for Every Year
Resources
For a complete list of qualifying medical expenses, see page 23 of the IRS Tax Guide for Seniors. For more information on medical expense deductions, see IRS Publication 502.
Figuring all this out probably sounds like a terrifying concept, especially if you’ve never paid employer taxes before.
Don’t worry, SurePayroll makes it easy! They help you stay compliant with both federal and state taxes and give you access to a bank of experts who can help you through both technology and compliance issues.
Set up direct deposit for your household help so that payments are onetime and easy to track. And SurePayroll will process all the proper forms, deductions, and returns. Phew!
Take the stress out of tax compliance with SurePayroll.
