domestic help(nanny)

[TAXMAN]

For my Virginia friends:

Question is. My domestic household help that gets paid. We are paying the Fica and medicare tax for her. It gets include in wages for w-2 gross but not for the social security box or the medicare box. It also does not get included for calculation of Futa tax.

In reading the va book what is gross wages  subject to unemployment, I find that the sui wages will be the same as the medicare wages. Since we pay the medicare tax for the employee and it doesn't get included in medicare wages can I assume it does not get counted as SUI wages?

can someone give me a clear answer on this and where did you find the information for this? Thanks to all.

[Medlin Software, Dennis]

I dislike gross up... as it make more work (costs more) than any tax savings.

[Medlin Software, Dennis]

2017 Pub 15a, page 22, the gross up amount is taxable wages, including FUTA wages, SS wages, and Medi wages, so likely SUTA wages as well.

So for 100 net, the gross (and taxable for all purposes) is 108.30.  Providing the employee the extra 7.65, cost the employer 8.30, plus (at least) the increased WC, FUTA, SUTA, on the 8.30.  In CA, using the default SUTA, and a low WC, the gift of the 7.65 has a real cost of at least 9.

[Medlin Software, Dennis]

Oops, forgot the extra employer side 7.65% on the 8.30...

 

[Abby Normal]

To recap, boxes 1, 3 & 5 on the W2 will all be the same after adding in the Social Security and Medicare. We used to have to do an iterative calc on that but not anymore.

[TAXMAN]

I did not think think that boxes 3 and 5 for domestic home care would be the same. I must go reread the rules. Thanks for bringing this to my attention. TP told me wrong. It is not a nanny its for people who help a disabled lady in her house. I think this makes all the difference.

Edited January 31, 2018 by TAXMAN
correction by TP

[easytax]

Good reference for "Nanny" or other home employee's is http://www.myhomepay.com/ . Especially under the answer section.

[Abby Normal]

Requires login.

[easytax]

3 hours ago, Abby Normal said:

Requires login.

Try it again,  just checked and no login for the home page answers section, only if you have an account and want to use them (even then, no charge according to webinar, unless you use actual service). Information is there for the looking.

[Abby Normal]

I can view answers in Chrome but not Firefox. Weird.

Thanks!

Edit: It was my https everywhere addon that wouldn't let me view that page.

[Randall]

I assume the household employer is not withholding the employee FICA and is paying both halves themselves.  Why not just consider it a gift and forget about the grossing up.

 

[Medlin Software, Dennis]

7 minutes ago, Randall said:

I assume the household employer is not withholding the employee FICA and is paying both halves themselves.  Why not just consider it a gift and forget about the grossing up.

 

Many will, but since the "gift" is a result of (and would not exist without the) employment, it is taxable income to the employee.  There is no grey area, this exact situation (employer paying the employee's share of SS and Medicare) is covered, black and white, in the IRS Pub 15a, Page 22 (2017).

Thus the employer will not be reporting wages properly, and the employer will not only be causing an issue for the employee, but with their WC company, FUTA, and SUTA.