Payroll tax compliance for your new employee does not need to be terrifying, time consuming or expensive!
When you hire through CareLinx to care for your loved ones, you become a household employer. A household employer is someone who hires an individual to perform duties and provide services under their direction in a private home. Generally, these workers are your employee, not independent contractors. Failure to properly classify the worker and make the appropriate employment tax filings and payments is considered tax fraud by the IRS.
PAYROLL TAX RESPONSIBILITIES
You are responsible for employment taxes when you pay a household worker who is 18 years or older $2000 or more.
Social Security and Medicare Taxes: The household employer is responsible for the payment of all Social Security and Medicare taxes to the IRS. You may choose to either collect your employee’s taxes via payroll deductions or fund these taxes yourself.
Unemployment Taxes: You will make contributions to the IRS and state to fund unemployment and worker re-training programs.
Income taxes: Federal and state income taxes are ultimately the responsibility of the household employee.
Tax Filings: You have both Federal and State tax filing responsibilities. Federal employment taxes are reconciled with the household employer’s annual Federal Income tax return. Your state will require quarterly unemployment tax filings, reports and remittance. Employee wages are reported to the Social Security Administration. Your employee is due a W-2 form in January.
OTHER LEGAL RESPONSIBILITIES
Verification of Work Eligibility: All U.S. employers are required to verify a candidate's employment eligibility using Form I-9.
Fair Labor Standards Act (FLSA) Compliance: Maintain accurate and contemporaneous records including time tracking, gross pay calculations, and detailed records of all deductions from the employee paycheck. Pay no less than minimum wage on an hourly rate basis.
NEW JERSEY LABOR LAWS
Minimum Wage & Overtime Pay: New Jersey requires that all household employees, including senior caregivers and companions, be paid at no less than the greater of the state or federal minimum wage, and that all workers be paid an overtime differential of 1.5 times the hourly wage for hours over 40 in a work week.
Payroll Frequency: New Jersey allows you to pay your household worker daily, weekly, bi-weekly or semi-monthly, and does not permit monthly pay cycles. Pay upon separation is due immediately.
Workers' Compensation Insurance: New Jersey requires that all household employers obtain Workers’ Compensation Insurance. You may purchase this from a commercial insurance company approved by the NJ State Insurance Commission or from the New Jersey CRIB (http://www.njcrib.com/).
Paid Time Off: New Jersey does not mandate any paid time off for non-exempt workers.
You are not required to provide employee health insurance, however there are financial and retention advantages to contributing some or all of your employee’s health insurance premium.
Questions? Ask us!