Nanny Tax and Deadline Issues

Now that the tax season is here with us, it is well in order that those families who have got employees in their households have got some imminent deadlines. As most tax professionals could be aware, the much disregarded household employment taxes otherwise referred to as the nanny taxes offer an exceptional set of challenges due to families lacking experience with tax and labor law, payroll and having an inclination for omissions and mistakes.

In case there are clients who crossed the FICA threshold in reporting as per last year, the following are the steps in closing books in the 2013 obligations of the household employer for processing the income tax returns.

1. Ensure that the fourth quarter projected tax payment has been sent to IRS.

All through the year, your client ought to have made projected payments by use of the IRS form 1040 –ES. In order to account for the Social security, Federal Income taxes and Medicare, their final payment needs to be due on 15th January.

2. Ensure that the state employer tax returns for the Q4 2013 were filled by 31^st January

In general terms, the household employer tax returns are usually due to the state on the last day of the month after the close of the quarter. This means that your clients ought to have filled the fourth quarter state returns on or before 31^st January 2014.

3. Enquire if the employee W-2 was delivered by 31^st January.

Most domestic employees wish to have a beginning on filing their individual income tax return and will begin querying their delayed W-2.

4. Form W-2 Copy A and Form W-3 need to be sent to the administration of Social Security by 28^th February

The same information as that contained in the W-2 form needs to be provided to the employee and will also need to be sent by mail to the SSA.

5. Prepare and attach a H schedule to the individual personal income tax return

Schedule H is required to summarize the federal wage activity for the year for the household employers.

6. Ensure that the dependent care tax breaks are maximized.

7. Discuss compliance in labour laws.

8. As a tax savings option, a non taxable compensation needs to be offered.