Breedlove and Associates Archives

March 14, 2013 Blog By admin No Comments

Nanny Tax Amnesty

You may have seen Stephanie Breedlove featured in a Wall Street Journal story recently recently about “nanny tax amnesty.” The technical term the RS is using is Voluntary Classification Settlement Program (VCSP) and this is very relevant to the household employment industry. In our experience, there are 2 very common mistakes families make when hiring a household employee:
1) They misclassify their employee as an “independent contractor” by giving them a Form 1099. (Worker misclassification is considered tax evasion for the family. Meanwhile, it increases the employee’s tax rate and limits her benefits).

2) They fail to withhold taxes and report wages properly. (Also known as “paying under the table,” the IRS considers this tax evasion too. It carries similar risk for the family and denies all benefits to the employee).
The VCSP helps with the first mistake because it is designed to allow employers who have

misclassified their employee to come clean with very minimal penalties compared to what the IRS usually levies. By filling out the appropriate forms and paying the subsequent penalty, the employer agrees to treat the “independent contractor” as an employee moving forward and is not subject to an IRS audit.
For families who are currently misclassifying their household employee and want to correct the mistake, we recommend speaking with an accountant who will be able to assist in filing the correct paperwork to complete the VCSP. To take advantage of this amnesty offer, you must file by June 30, 2013.
For families currently paying their household employee “under the table,” Breedlove & Associates is happy to provide a simple, cost-effective solution that serves as an “amnesty program.” Lobbying on behalf of clients, we have an excellent track record of getting the penalties waived for first-time offenders.
As with any tax matter, it is much cheaper and easier to rectify a mistake if you come forward prior to an audit – and these “nanny tax” mistakes are prime examples of that IRS philosophy.
If you have any questions about these amnesty initiatives, please don’t hesitate to call us at 1-888-273-3356. We’re here to help.Breedlove and Associates, guest blogger

Tags: Breedlove and Associates, Form 1099, independent contractor, IRS, IRS audit, IRS penalties, Nanny tax compliance, Nanny Taxes, VCSP, Voluntary Classification Settlement Program, worker misclassification

January 5, 2013 Blog By admin No Comments

Here’s What You Need to Know for 2013 Taxes

HAPPY NEW YEAR!

NEWS & NOTES FOR 2013

Here’s what you need to know for the new year:

The Payroll Tax Holiday Has Expired. The social security tax has reverted to its traditional 6.2% (it was temporarily reduced to 4.2% in 2011 and 2012 in an attempt to stimulate consumer spending). The change will decrease take-home pay for all U.S. workers. Your full-time nannies will see a change of about $10-$15 per week, depending on their income level.
The FICA Reporting Threshold Did Not Change. The $1,800 threshold has been extended through 2013. Families who pay a worker less than that amount are absolved of the FICA reporting responsibilities under the “casual babysitting exemption.”
The Federal Mileage Reimbursement Rate Has Increased. The rate for mileage reimbursement increased by one penny per mile. It’s now 56.5 cents for each mile an employee drives on the job.

ANNOUNCING A NEW SIMPLE SOLUTION TO WORKERS’ COMPENSATION INSURANCE

We are very pleased to announce a major breakthrough in our long-time quest to provide families with simple, affordable access to workers’ compensation insurance.

We’ve always educated families on workers’ comp and guided them to the best solution for their situation/state. However, in recent years, the solution options have dwindled. More and more families have complained that finding an affordable, stand-alone policy is difficult. In some states, it’s next to impossible.

So, we decided to take control of the situation. After more than a year of research and meetings and due diligence, we have teamed with PMC Insurance Group and an A-rated underwriter to help them create HomeStaffPROTECT — the first and only workers’ compensation insurance product custom-built to meet the unique needs of nanny employers.

Since we worked closely with PMC Insurance Group to develop HomeStaffPROTECT, Breedlove clients will have exclusive access to this stand-alone workers’ comp product.

It will be extremely convenient. With instant online quotes and a pre-filled online application (pre-filled from their Breedlove payroll data), obtaining a workers’ compensation policy will take families less than 5 minutes.

If you’re wondering about cost, you’ll be pleased to know that HomeStaffPROTECT will be a low-cost leader. PMC is a wholesale provider and Breedlove does not take any commissions or mark-ups or charge any administrative fees. So, our mutual clients can rest assured that they’re getting the best price possible.

Finally, we’ve gone to great lengths to ensure that customer service and claim support are handled with the same level of expertise and responsiveness we deliver on our payroll service.

HomeStaffPROTECT is licensed in 24 states (which includes all of the “problem” states) with more states coming soon. In all of the other states, we’ll continue to educate and guide as part of our setup process. The bottom line is we can now ensure — one way or another — that families in every state have a convenient, cost-effective solution to workers’ comp.

We’re excited to bring the combination of high quality, high convenience and low cost to the workers’ compensation insurance market as a way to help families and nannies receive this important protection.

If you or your families have any questions about workers’ compensation insurance, just let us know. We’re here to help.

Guest Blogger, Tom Breedlove

QUICK TAX FACTS

$1,800: Annual wage threshold for Social Security & Medicare (“FICA”) reporting

$1,000: Quarterly wage threshold for Unemployment reporting (some state thresholds are lower)

$2,500: Total childcare tax breaks available for families

1.5: Overtime rate of pay when work week exceeds 40 hours

$0.565: Federal mileage reimbursement rate

$7.25: Federal minimum wage (some state rates are higher)

$2: Approximate daily cost to have Breedlove & Associates handle all payroll and tax compliance duties with no work and no worry.

HELPFUL LINKS

Employee Paycheck Calculator

Employer Budget Calculator

Nanny Tax Overview

Helpful Videos

88-BREEDLOVE (888-273-3356)

www.myBreedlove.com

Connect with us online!

June 30, 2012 Blog By admin No Comments

Don’t Let The Flexible Spending Account Window Pass You By

From our friends at Breedlove and Associates . . .
The Flexible Spending Account Window

Summertime is upon us. Since more babies are born in the summer than any other season, it’s a good time to share a very simple tip that can save new parents up to $1,700.

The Situation

A couple gave birth to a baby boy on July 3, 2011. In mid-July, they began searching for a nanny so the mom could go back to work after Labor Day. With about 2 weeks to spare, they found the perfect nanny.

When the mom went back to work, she learned that they had missed out on a major tax break.

break.

The Law

Families with childcare expenses are entitled to tax breaks to help offset some of the costs of care. (There is no income restriction on the childcare tax breaks so everyone qualifies — as long as the children are under age 13 and both spouses are working, looking for work or full-time students).

The most lucrative childcare tax break is the Dependent Care Account (commonly called a “Flexible Spending Account” or “FSA”). FSAs are federal tax breaks offered through business employers as an benefit to their employees. If either one of the spouses has access to an FSA through their company, the family will be able to pay for up to $5,000 of childcare expenses using pre-tax dollars. That means the family has no taxes on that portion of their income,

which will save them between $2,100 and $2,300 per year, depending on their marginal tax rate.

Enrollment in the FSA is limited to once a year (most companies offer open enrollment in the fall for the subsequent tax year). However, there is a 30-day window after a “life-changing event” (i.e. birth of a child) when the family can enroll immediately — allowing them to take advantage of this tax break during the current tax year.

When families don’t have access to a Flexible Spending Account (or miss the 30-day window enrollment opportunity), they can utilize the Child and Dependent Care Tax Credit when they file their federal income tax return. This tax credit allows families to itemize up to $3,000 per child per year (maximum of $6,000 per year). After the 20-35% tax credit is applied to those expenses, most families will save $600 per year if they have one child and $1,200 per year if they have 2 or more children.

The Outcome

Because the family missed the 30-day window for life-changing events, they were not able to enroll in their FSA program for the 2011 tax year, and therefore, missed out on $2,300 in savings.
Instead, they had to settle for the Child and Dependent Care Tax Credit using Form 2441 when they filed their federal income tax return. The tax credit saved them $600 in 2011.
The difference between the two tax breaks for this family was $1,700 ($2,300 – $600). That $1,700 in extra tax breaks would have paid for a lot of diapers!

How It Could Have Been Avoided

Unfortunately, this story is extremely common. As first-time parents become first-time employers, there is a lot of new information to process. During this busy stage of life, families need expert guidance and support throughout the nanny search and hiring process. Without it, oversights, mistakes and missed opportunities happen regularly — especially in the tedious and complex world of household employment tax and labor law.

As a remedy, Breedlove offers a New Employer Orientation free of charge. This 10-minute no-pressure, no-obligation phone call allows a Breedlove household employment expert to assess the family’s unique situation and provide expert guidance on all the tax and labor law issues that will come into play for them. Whether they decide to use their “nanny tax” service or not, this guidance will likely save thousands of dollars and dozens of hours.

888-BREEDLOVE (888-273-3356)

www.myBreedlove.com

Tags: Babies, Breedlove and Associates, Child and Dependent Care Tax Credit, Childcare Tax Breaks, Dependent Care Account, Dual Income Families, Federal Income Tax Return, Flexible Spending Accounts, Form 2441, Going Back To Work, Nannies, Payroll and Taxes, Savings For New Parents, Summer, Tax Credits, The Perfect Nanny

Nanny Tax Amnesty

Don’t Let The Flexible Spending Account Window Pass You By

About Us

Contact Information

Social Media