In a recent article published by GTM Payroll & HR, they uncover what household employers can expect this year when it comes to employing someone to work in your home (e.g., nanny, housekeeper, in-home senior caregiver).
1. Tight nanny job market: The demand for in-home childcare is unprecedented and does not seem to be slowing down. Nanny placement agencies say in-home caregivers are in extremely high demand calling the job market “highly competitive.” Others say they are experiencing a shortage of candidates with nannies seeing their rates increasing by $2 to $4/hour.
For families, this means not only offering a competitive rate but also presenting themselves as desirable employers. In our recent survey of nannies, working for a trustworthy/ethical family and the personality of the family were more important to them than the rate of pay.
2. Popularity of nanny shares: In a nanny share, two or more families hire a caregiver who will look after all the children in one of the family’s homes. It can help families save on the cost of in-home childcare and provide similar socialization benefits as a daycare for your children, while your nanny can make a little more than their usual rate for a single family.
3. Rising minimum wage rates: Half of U.S. states are boosting their minimum wage rates at some point in 2022. It is important for household employers to check the rate that applies to them as their nanny’s hourly pay could quickly become a wage violation. Paying below minimum wage and not accounting for overtime hours are two of the easiest ways families fall out of compliance with nanny tax laws.
4. Following paid sick and family leave laws: In some states, it can just be a set amount of paid leave you need to offer your employee. In other locations, like New York; Connecticut; Washington D.C.; and Massachusetts among others, payroll contributions to state-run paid leave programs are required from employers and/or employees.
Check with your state’s labor agency to see what paid leave requirements you may have as a household employer.
5. Filing your 2021 taxes: A couple of things may be a little different this tax season if you provided paid sick or family leave for pandemic-related reasons through the American Rescue Plan. In 2021, offering paid leave was voluntary but employers can still take the same dollar-for-dollar tax credit. Also, waiting for COVID-19 test results, obtaining a vaccine, and recovering from the effects of vaccination were added as qualified reasons.
On your employee’s W-2, you will need to indicate the amount of paid leave in box 14. Then on Schedule H, you will reconcile the paid leave provided as well as your employer tax credits.
6. Contribution limits adjusted for 2022: Several contribution limits were updated for the 2022 tax year including:
- Dependent Care FSAs return to $5,000 for married filing jointly and $2,500 each for married filing separately
- QSEHRA: $5,400 for individuals and $11,050 for family coverage
- Health Savings Accounts (HSAs): $3,500 for individuals and $7,100 for families
- Retirement Plan: Up to $20,500 in employee contributions to a 401(k) and $14,000 into a SIMPLE 401(k)
- Qualified Transportation Benefits: $280 for community and $280 for parking
- Student Loans: Employers can provide up to $5,250 tax-free toward a worker’s student loans
7. Another increase to the nanny tax threshold: The employment coverage threshold for household employees gets another small boost to $2,400 in 2022. If a domestic worker meets or exceeds that threshold, Social Security and Medicare taxes must be paid by the family and the employee.
Click here to read the full article from GTM.
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