February 8, 2012
We get a lot of questions about health insurance. As a household employer, do I have to cover health insurance for my nanny? If I do provide it, are there any tax breaks to help offset the costs?
The answer to the first question is "No" -- health insurance is an optional benefit for families with a domestic employee(s).
On the second question, the answer is "Yes" -- household employers who decide to contribute to their employee's health insurance realize two tax advantages:
NON-TAXABLE COMPENSATION. The employer's health insurance contribution is considered "non-taxable compensation," which means that neither the employer nor the employee have to pay any taxes on that portion of the compensation.
THE HEALTH INSURANCE TAX CREDIT FOR SMALL EMPLOYERS. This recent legislation provides families with a tax credit of up to 35% of the health insurance contribution. To qualify, employers must a) contribute at least 50% of the health insurance premium, b) have less than 25 employees, and c) pay their employees -- on average -- less than $50,000 per year.
Together, these two tax incentives can make health insurance a smart part of the compensation package for many families. For an estimate of your savings, feel free to call us at 888-273-3356.
December 3, 2010
Good news for families who contribute to their employee’s health insurance premiums! In addition to being a non-taxable form of compensation (no taxes for you or her), the IRS has just announced that most household employers will be eligible to take a tax credit of up to 35% on that expenditure starting with the 2010 tax year.
For example, if you contributed $350 per month to your employee’s health insurance policy, your tax bill would be reduced by $1,470 ($350 x 12 = $4,200 x 35%).
Bottom line: if you're hiring an employee and she has health insurance -- or is considering health insurance -- we strongly advise you to structure your payroll to include employer-paid health insurance. Both of you will save money.
For more information regarding the details in your state, feel free to give us a call.