Home Schooling, Household Employees, Nannies and childcare at home.
Do you have children at home during this time of Covid? Childcare and schooling are a major issue for many right now. There are several options (including quitting your job), but it may be less expensive for you to hire someone to come to your home and care for your children or join with other parents to hire an in home childcare/teacher/nanny.. The IRS categorizes this person as a Household Employee. Household employees are people who perform work in and around your home. They include babysitters, caretakers, nannies, housekeepers, and yard workers.
If you do hire a household employee, you will need to withhold and pay their Social Security, Medicare, and Unemployment taxes. You must pay Social Security and Medicare (FICA) taxes for each qualifying household employee who earns above the IRS threshold of $2,200 in 2020 and pay federal unemployment (FUTA) tax for each employee you pay $1,000 or more in a calendar quarter.
Many agencies will charge over $75 per month to run your payroll. I have devised a spreadsheet as well as a set of processes for household employees. I charge $200 current for 1040 tax prep clients ($300 for non-tax prep clients) and I’ll give you a spreadsheet for you to calculate payroll for each employee for withholding tax, your share of taxes for up to 2 household employees. Each quarter I charge $75 for estimated payments filings and At the year-end I charge $75 for the preparation of W-2s for up to 2 household employees.
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