Household Employees (Nanny) I wanted to check in and see if you will need my help in preparing your Nanny payroll for 2009. If you have your Nanny spreadsheet completed you can send it to me and I will prepare the appropriate documents and return them to you for signing and mailing. I can provide a Nanny spreadsheet and my Nanny memo if you have questions. The Forms are due to the Nanny by 2/1 and to the Government by 3/1.

Form 941 This form is filed quarterly. The deposit schedule for this tax, however, varies depending on the amount of the tax liability payment for each pay period. It is the combination of Federal Withholding Tax, Employee's share of FICA and Medicare, and the Employer Match of FICA and Medicare. If you know that your total tax liability for the quarter is going to be less than $2,500 you can just send the payment to the IRS with your 941 form quarterly. Most companies have to make their deposits through EFTPS (Electronic Federal Tax Payment System) or by submitting a check with a tax coupon (form 8109) to a financial institution.

There are two deposit schedules - monthly and semi-weekly - for determining when you have to make your deposits. Before the beginning of each calendar year, you must determine which of the deposit schedules you are to use. You determine this by your "lookback period". The lookback period begins July 1st and ends June 30. For 2010 reporting, your lookback period would be July 1 of 2008 through June 30 of 2009. If you reported $50,000 or less of taxes for the lookback period, you are a monthly schedule depositor; if you reported more than $50,000 you are a semiweekly depositor.

Monthly depositors must make their deposit by the 15th of the following month. Semiweekly depositors make their deposits as follows: If the payday was on a Wed, Thurs, or Friday, the deposit is due that next Wednesday. If the payday was on a Sat, Sun, Mon or Tues, the deposit is due that next Friday. For more details, go to your search bar and type in Publication 15 (Circular E). This is the IRS Employers' Tax Guide. (See additional info about Earned Income Credits, etc) You can also order a copy of Publication 15 (Circular E) from the IRS. The wage limit for FICA and Medicare is $106,800 for 2009 and $106,800 for 2010.

Form 940 This tax, also knows as FUTA, is the Federal Unemployment Tax. It is filed annually, due the end of January for the preceding year. We pay both Federal Unemployment Tax (FUTA) and State Unemployment Tax (SUTA) in the state of Washington (see below). There is nothing withheld from the employee’s check for FUTA – it is all paid by the employer. For 2009, the FUTA tax rate is 0.8 % on the first $7,000 you pay each employee for the year. Even though this form is only filed annually, for depositing purposes, figure the tax quarterly. If your tax liability for the quarter is $500 or less, you do not have to make a deposit yet – you can carry if over to the next quarter. If it’s over $500, you make your deposit through EFTPS or with a voucher 8109 at a financial institution. The Circular E also has more information about this tax on page 29.

Employment Security This tax, also known as SUTA, is the state unemployment tax. It is filed and paid quarterly. Watch the rate on this tax – changes are often missed and the wrong amount is reported and paid. Corporate Officers may choose to be exempt. Under the old system, Corporate Officers were generally exempt unless the corporation requested that they be covered. It's now the opposite; they will be covered unless they request not to be. Download the form from Employment Security web site - http://www.esd.wa.gov. The wage base for paying this tax is $34,000 at this time. Hours worked on this tax form include paid vacation and holiday. You can also find rates on the web site. You can download software called UIFastTax directly from the Employment Security website for free, and pay your tax and file quarterly reports.

Department of Labor & Industries This tax, often called State Industrial Insurance, or Workers' Comp, is for injury claims. It is a type of insurance that employers are required to have in case their employees get injured on the job. Watch your payroll companies - they don't always handle L&I, and it can get missed, and get you in trouble with the state. Ask them if they are paying this tax if you are not handling it yourself. This tax is paid on hours worked, and different kinds of workers have different rates, based on risk of injury, etc. An office worker will have a different rate than a laborer, so check rates on their website and call if you aren't sure. L&I will assign rates for you. This tax can also be paid online, using Quick File or Deluxe File. See web site - http://www.lni.wa.gov. There is an employee portion of L&I and an employer portion. These are broken out on the rate notice. Also, the tax is paid only on hours worked – not holiday, sick, PTO, or vacation.

Third-party Payroll Service Providers Issues Many businesses use a third-party service provider to process their payroll. Although this is generally an efficient, cost effective way to handle a company’s payroll needs, it is important for you to understand that, even if a third party is making the deposits, the employer (including potentially, the owners and officers of the employer) remains the responsible party as far as the IRS is concerned.

There have been a number of recent prosecutions of individuals and companies who have, acting under the guise of a service provider, stolen funds intended for payment of employment taxes. To ensure this does not happen to your business, we recommend taking the following precautions when using a third-party payroll service provider:

Informational Tax Filing Requirements for 2009

It’s that time of the year again—when the government gathers information on wages and other payments your business made during the year. You are undoubtedly aware of the W-2, Wage and Tax Statement, which must be provided to each of your employees and to Social Security Administration. These forms are due to employees by February 1st & to Social Security Administration by March 1st. But your information-reporting obligations don’t end there. Here’s a rundown of other common payments that may require an information return.

- Payments of $600 or more to contractors or other services providers (other than corporations) must be reported to the recipient and to the IRS on Form 1099-MISC, Miscellaneous Income. The form is due to the recipient by February 1st and to the IRS by March 1st.

- Payments to attorneys for business-related services must be reported to the attorney and to the IRS. These payments must be reported on Form 1099-MISC regardless of the amount and regardless of whether the attorney is incorporated.

- Rents totaling more than $600 paid to an individual landlord, partnership, or estate (but not rents paid to a corporation) must be reported on Form 1099-MISC. (However, rents paid to a real estate agent are generally not required to be reported.)