Time is precious, and often we need help at home so we can have more time to run our businesses. That may mean hiring help for personal tasks such as caregiving for a young, elderly, or special needs family member. When you hire household workers, there’s a whole different set of rules to follow compared to hiring for business.
Underground Payroll
There is a whole industry of “underground” payments made to domestic workers. Individuals such as housekeepers –regardless if they live with you full-time or work once a month — are often wrongly paid as contractors, and often in cash. According to the IRS, these workers should be paid as employees, even if they’re part-time.
Cracking Down
One of the focus areas for the IRS is this area of household payroll. This strong drive to bring “underground” payment systems to the light come from several new pieces of legislation. A few states have recently passed a domestic workers’ bill of rights. Changes in minimum wage and overtime requirements are constantly going into effect. And the Affordable Care Act requires workers to document their wages before they can qualify for a subsidy, so this can bring more workers asking you to get them fully documented on your books.
Getting It Right
The need to hire household workers is rising due to the “silver tsunami”. This term describes the aging of the Baby Boomer generation and their growing need for health care, which will truly stretch our system based on their numbers.
Expert Guidance
When your family makes the decision to hire household workers, seek expert guidance. You’ll want to learn about the risks and compliance issues in this area so that you can properly protect your personal wealth and peace of mind. And if we can help, please reach out and let us know.