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New York Fact Sheet Household Tax Compliance Tips


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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 $2,200 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 New York 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.

NEW YORK LABOR LAWS

Minimum Wage

New York defers to the FLSA, which requires that all domestics, including companions, be paid at no less than the greater of the city, state, or federal minimum wage.

New York minimum wage is $11.80/hr, but will increase by $1/hr each year until it is $15/hr.

  • New York City minimum wage is $15/hr.
  • Long Island and Westchester minimum wages are both $13/hr, but will increase by $1/hr each year until they are both $15/hr.

Overtime Pay

Live-out workers must be paid an overtime differential of 1.5 times the hourly wage for hours over 40 in a work week. Live-in workers must be paid an overtime differential of 1.5 times the hourly wage for hours over 44 in a work week.  Overtime or premium pay is not required for hours worked in excess of 8 per day or on weekends or holidays.

Paid Time Off

The New York Domestic Worker Bill of Rights grants employees 3 days paid time off after 1 year of employment.

  • New York City domestics receive an additional 2 days paid sick leave after a year of employment.

Mileage Reimbursement

The federal government establishes and updates a maximum rate for non-taxable mileage reimbursement each year.  The current rate is $0.575 per mile.

Payroll Frequency

All household employees in New York must be paid on a weekly basis. Pay on separation is due on the next regular pay date.

Payroll Documentation

The NY Wage Theft Prevention Act requires all employees receive a pay rate notice at time of hire and any time the hourly rate changes. The notice must include regular and overtime rates of pay and the regular payday. In addition, you must offer a written notice on work policies including sick leave, vacation, personal leave, holidays, and hours of work.

Each time you pay an employee, you must provide them with a statement that includes the dates that they worked; their name; your name, address and phone number; their rates of pay and reason for getting paid; their gross wages earned, deductions taken, allowances taken, and net wages earned; and their regular rates of pay, their overtime rate, their number of regular hours worked, and their number of overtime hours worked, if they are not exempt. You can find a sample pay stub here.

Employment Contract Requirements

A written work agreement detailing work policies including sick leave, vacation, and personal leave should be provided to your employee. A free sample work agreement can be found here.

Workers’ Compensation Insurance

New York requires that household employers immediately obtain Workers’ Compensation and Disability Insurance (including Paid Family Leave) policies. 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. Information and an application are available online at the NYS Insurance Fund (NYSIF.com). More information can be found at http://www.wcb.ny.gov/content/main/Employers/EmployerHandbook.pdf. Alternatively, a Workers’ Compensation Insurance 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).

State Unemployment Insurance

New York requires a new employer state unemployment insurance tax of 3.125% for the first $11,600 wages paid to each employee. This may vary if you have previous employees.

Frequency of Tax Filings

New York requires near-immediate payment of income tax withholding upon meeting certain thresholds set by statute.  Currently, an employer has 5 days to make a payment after accumulated taxes meet the state threshold.  As such, HWS can only guarantee compliance through our Complete Payroll service level.

New York requires quarterly tax filings for unemployment insurance taxes.

Domestic Workers Bill of Rights (DWBR)

New York has a Domestic Workers Bill of Rights (DWBR) which includes requirements about overtime requirements, payroll documentation, days of rest, and other protections for your employees. A detailed list of requirements for employers 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 insure 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.

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