If you paid a household worker, such as a gardener, housekeeper, or nanny, more than $1,700 in 2011 (or will pay more than $1,800 in 2012), you may be liable for payroll taxes on the wages paid. For details or filing assistance in meeting your nanny tax obligations, give us a call.
Don’t let penalties for underpaid taxes increase your tax bill next April. Check the total you’ve paid in for 2011 through withholding and/or estimated taxes. If you’ve underpaid, consider adjusting your withholding for the final pay periods of 2011 or increasing your remaining quarterly estimate. If you employ household workers, be sure your calculations include the payroll taxes you’ll owe for them.
If you’re planning to add employees in your business, consider doing so before January 1, 2011. Under the “HIRE Act” passed earlier this year, you could qualify for an exemption from social security payroll taxes on wages paid a new worker who had been unemployed for the previous 60 days or more. Keep the new worker for at least a year, and you could also qualify for a tax credit of up to $1,000.
* According to the Census Bureau, nearly half of Americans live in a household in which someone receives government benefits.
* 45% of U.S. households pay no income tax, up from 39% five years ago. Half of those don’t earn enough to pay income tax, and the rest use credits and deductions that eliminate their tax liability. Most of these households still pay social security and Medicare payroll taxes.
* 13% of all U.S. households pay neither income tax nor payroll taxes.
* An estimated 47.4 million people are covered by Medicare today. Projections indicate that by 2030, that number will grow to 80.4 million.