Every year, we talk to a lot of household employers who are facing expensive tax and legal problems for failure to handle the "nanny taxes" correctly.  The vast majority of those problems are easy to avoid -- if you address payroll at the time of hire.  Unfortunately, many families wrongly assume they can just hand it over to their tax professional next April.

What's the problem with that approach?  While it is legally permissible to remit the federal household employment taxes with your income tax return next April, there are state filing requirements that cannot be put off until next April.  Most states require that employment tax returns be filed quarterly -- and some have monthly requirements.  Waiting until next April will trigger late filing penalties and interest charges from your state.  (In addition, you may incur underpayment penalties on the federal taxes if the amount owed takes you out of the IRS "safe harbor").

Finally, there are important labor law requirements that, if not handled correctly from the outset, can create liabilities for families.  That's why we take the time to guide families through things like Form I-9, workers' compensation insurance, disability insurance, overtime and other state-specific requirements.

Give us a call and let our New Employer Orientation team help you make a problem-free, stress-free hire.  When it comes to the tax and legal aspects of being a household employer, an ounce of prevention is definitely worth a pound of cure.

With California gubernatorial candidate Meg Whitman getting called to the carpet for employing an undocumented domestic worker, we’ve been getting lots of calls from household employers wondering how they can avoid similar legal problems.

The answer is Form I-9, which is used to verify worker eligibility.  Employers are required to examine the worker’s documents and have her complete the form.  The completed form is not submitted to the government, but the employer must keep it on file.  If there’s ever a question about her work status, that’s your ticket.