Single Point of View

Single Point of View is our way to occasionally share planning ideas relating to personal finance. Our goal is to pass along concepts that you may not be exposed to on a daily basis.

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Hiring Household Help? Don't Forget about your FSA.

Since this is the time of year where families may have just made some change to their household help  either for their children or an elderly parent, it is a good time to make sure you are aware if your company offers a Dependent Care Account (Flexible Spending Account).  Below is a case study that summarizes one family’s experience weighing the cost of hiring a nanny for twins vs having one parent stay home.     Household Employment Case Study Hiring Household Help? Don't Forget about your FSA   For most families that hire a nanny or senior caregiver, the best tax break available is a Dependent Care Account (also known as a Flexible Spending Account or FSA). When fully optimized, this tax break generally saves families more than $2,000 per year. This significant tax savings is an important variable to look at - especially when setting a budget for childcare...
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Tax Laws for Household Employees

When a family hires an individual to perform duties in or around their home, they are considered a “household employer.” The IRS views the worker — whether a nanny, health aide, housekeeper, gardener, cook/chef, personal assistant, estate manager, etc. — as an employee of the family. Misclassifying an employee as an “independent contractor” is considered tax evasion.If a household employee is paid more than $1,900 (2014) in a calendar year, the household employer is required to withhold and remit payroll taxes to the state and the IRS. If a household pays an employee less than the threshold in a calendar year, payroll taxes are not required to be withheld and remitted; however, the household is still legally considered an employer and, therefore, must adhere to federal and state labor laws.Click on the pictures below to read more from Care.com and HomePay on the financial and legal responsibilities for household employees:  ...
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