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 YORK LABOR LAWS
Minimum Wage & Overtime Pay: New York requires that all domestics, including companions, be paid at no less than the greater of the state or federal minimum wage.Live-out workers must be paid an overtime differential of 1.5 times the hourly wage for hours over 40 in a work week. Live-in workers must be paid an overtime differential of 1.5 times the hourly wage for hours over 44 in a work week.
Payroll Frequency: All household employees in New York must be paid on a weekly basis. Pay on separation is due on the next regular pay date.
Workers' Compensation Insurance: New York requires that household employers immediately obtain Workers’ Compensation and Disability Insurance policies.Information and application available online at the New York State Insurance Fund(NYSIF.com).
Paid Time Off: The NY Domestic Worker Bill of Rights grants employees 3 days paid time off after 1 year of employment. NYC domestics receive an additional 2 days paid sick leave after a year of employment. (Effective 10/1/2015 sick leave at the rate of 2days per year will apply for all domestics after 1 year of employment).
Pay Rate Notice: The NY Wage Theft Prevention Act requires all employees receive a pay rate notice at time of hire and any time the hourly rate changes.
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!