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Nevada Fact Sheet Household Tax Compliance Tips

HOMEWORK SOLUTIONS IS HERE TO HELP!

Payroll tax compliance for your new employee does not need to be terrifying, time consuming or expensive. HomeWork Solutions is a nationally recognized “household payroll” service company, providing household employers nationwide with trusted and time saving payroll and payroll tax solutions.

WORKER CLASSIFICATION IS THE KEY

You become a household employer when you hire an individual to perform duties and provide services under your direction in your private home. Generally, these workers are your employees, not independent contractors. Failure to properly classify the worker and make the appropriate employment tax filings and payments is considered tax fraud by the IRS.

PAYROLL TAX RESPONSIBILITIES

You are responsible for federal employment taxes when you pay household workers as little as $1,000 in a calendar quarter or when you pay any individual employee age 18 or over $2,700 in a calendar year.

You have both Federal and State tax filing responsibilities. Federal employment taxes are reconciled with the household employer’s annual Federal Income tax return. Your state may require quarterly unemployment tax filings, as well as reports and remittance of state income taxes withheld, if applicable. Employee wages are reported to the Social Security Administration. Your employee is due a W-2 form in January.

Social Security and Medicare Taxes

The household employer is responsible for the payment of all Social Security and Medicare taxes to the IRS. You may choose to either collect your employee’s taxes via payroll deductions or fund these taxes yourself.

Unemployment Taxes

You will make contributions to the IRS and Nevada to fund unemployment and worker re-training programs.

Income Taxes

Federal and state income taxes are ultimately the responsibility of the household employee; however, best practice is to deduct these taxes from your full time employee’s wages to help them avoid owing large sums when they file their annual income tax returns.

OTHER LEGAL RESPONSIBILITIES

Verification of Work Eligibility

All U.S. employers are required to verify a candidate’s employment eligibility using Form I-9.

Fair Labor Standards Act (FLSA) Compliance

Maintain accurate and contemporaneous records including time tracking, gross pay calculations, and detailed records of all deductions from the employee paycheck.

Pay no less than minimum wage on an hourly rate basis.

Health Insurance

You are not required to provide employee health insurance, however there are financial and retention advantages to contributing some or all of your employee’s health insurance premium. HWS is happy to discuss this with you.

NEVADA LABOR LAWS

Minimum Wage

Nevada defers to the FLSA, which requires that all domestics, excluding companions, be paid at no less than the greater of the state or federal minimum wage,

Nevada minimum wage is $11.25/hr. If you offer qualifying health benefits, the minimum wage is $10.25/hr.

Overtime Pay

All live-out workers are to be paid an overtime differential of 1.5 times the hourly wage for hours over 40 in a 7 day week. Live-out workers paid less than 150% of the NV minimum wage are entitled to daily overtime for hours over 8. Overtime or premium pay is not required for hours worked in excess of 8 per day, unless the aforementioned 150% NV minimum wage entitlement applies. Overtime or premium pay is not required for hours worked on weekends or holidays.

Live-in domestics, again excluding companions, must be paid their hourly wage for all hours worked, without an overtime differential. In Nevada, live-in domestics must also write that they agree to forego overtime pay to be paid at the standard rate.

The Nevada Domestic Workers Bill of Rights (DWBR) requires that you give your employees a day of rest (24 consecutive hours) each week and 48 consecutive hours of rest each month. If an employee chooses to work during their day of rest, all hours worked during that time must be paid at the overtime rate.

Paid Time Off

You are required to provide paid voting leave to employees for whom it is impractical to vote before or after work. What is considered “impractical” can be found here.

Mileage Reimbursement

The federal government establishes and updates a maximum rate for non-taxable mileage reimbursement each year. The current rate is $0.67 per mile.

Payroll Frequency

Nevada requires that all household workers be paid daily, weekly, bi-weekly or semi-monthly. Pay upon involuntary separation is due immediately; upon resignation on the next scheduled pay date.

Payroll Documentation

Each time you pay an employee, you must give them an itemized list showing the deductions made from their wages.

You must give employees at least 7 days notice before changing their payday or place of payment.

Workers’ Compensation Insurance

Nevada does not require household employers to obtain Workers’ Compensation Insurance. However, HWS ALWAYS recommends obtaining a Workers Compensation Insurance policy for the protection it provides in the event of a work-related injury sustained by your employee. A policy can usually be obtained easily and cost effectively by contacting your Homeowner’s or Renter’s Insurance provider. HWS can help you obtain this insurance through our insurance partner (just give us a call).

Employment Contract Requirements

Nevada has a Domestic Worker Bill of Rights (DWBR) which requires that you provide a written employment agreement at the time of hire outlining wages and benefits in English and a language the employee understands, if not English.

The written agreement must include:

Your full name and address,
The employee’s name and a description of their work duties,
Each place where they are required to work,
The date that their employment begins,
The period of notice required for either party to terminate the employment or the date on which the employment will end,
The ordinary workdays and hours of work for that employee, including breaks,
Their rate of pay, conditions and rate of overtime pay, and any other payment or benefits that they are entitled to receive, including health insurance, workers’ compensation insurance, or paid leave,
The frequency and method of pay;
Any deductions to be made from their wages,
If they are to reside in the employer’s household, the conditions under which you may enter their designated living space,
And a notice of all applicable state and federal laws related to employing domestic workers.

A sample work agreement can be found here.

State Unemployment Insurance

Nevada requires a new employer state unemployment insurance tax of 3.0% for the first $40,100 wages paid to each employee. This may vary if you have previous employees.

Frequency of Tax Filings

Nevada requires quarterly tax filings for unemployment insurance taxes and does not have an income tax.

Domestic Workers Bill of Rights (DWBR)

Nevada has a Domestic Worker Bill of Rights (DWBR) which includes requirements about employment contracts, minimum wage, overtime pay, breaks, and other protections for your employees. A summary of DWBR requirements can be found here.

HWS WILL HELP YOU DO THE RIGHT THING

HWS knows that most families want to pay their household employees legally and ensure that the employee receives workers compensation and unemployment insurance protections. You also want to establish a principled relationship with your employee who is caring for and interacting with precious family members. Getting the relationship started on the right footing, including complying with legal and tax formalities, helps set the tone for the relationship.