If you have a nanny watching your kids or a senior caregiver taking care of a loved one, you know there’s a lot to keep track of, whether it’s juggling schedules or managing payroll. To make things more complicated, new laws and regulations mean that every year, there’s always a handful of things that can change the way you handle payroll, taxes or the benefits that your caregiver receives.
2020 will be no different as there are three major changes that could affect how you manager your caregiver.
1. The threshold for having tax and payroll responsibilities increases to $2,200
If you have a household employee that earns at least $2,200 during the calendar year, the IRS says you’ll need to take care of a few payroll and tax responsibilities.
This is important to keep in mind in case you hire short-term care, such as a summer nanny, or if your parent needs temporary senior care if they unfortunately become sick or injured. If you do end up crossing the $2,200 threshold, you can use this tax filing timeline to keep yourself organized throughout the year.
2. Minimum wage increases in 15 states, 4 counties and 24 cities
The federal minimum wage of $7.25 per hour has not increased since 2009, but states, cities and counties can pass legislation to increase it locally. If you live in an area where multiple minimum wage laws are in effect, you must pay your caregiver the highest rate.
Beginning Jan. 1, if you live in the following places, make sure your caregiver is earning at least the new minimum wage per hour:
-
Arizona – $12
-
Flagstaff – $13
-
-
California – $12
-
Belmont – $15
-
Cupertino – $15.35
-
Daly City – $13.75
-
El Cerrito – $15.37
-
Los Altos – $15.40
-
Menlo Park – $15
-
Mountain View – $16.05
-
Oakland – $14.40
-
Palo Alto – $15.40
-
Petaluma – $14
-
Redwood City – $15.38
-
San Diego – $13
-
San Jose – $15.25
-
San Mateo – $15.38
-
Santa Clara – $15.40
-
Sonoma – $12.50
-
South San Francisco – $15
-
Sunnyvale – $16.05
-
-
Denver, CO – $12.85
-
Florida – $8.56
-
Illinois – $9.25
-
Maine – $12
-
Maryland – $11
-
Massachusetts – $12.75
-
Michigan – $9.65
-
Minnesota – $8.15
-
Montana – $8.65
-
New Jersey – $10.30
-
New Mexico – $9
-
Albuquerque, NM – $9.35
-
Bernalillo County, NM – $9.20
-
Las Cruces, NM – $10.25
-
-
New York – $11.80
-
New York City, NY – $15.00
-
Nassau County, NY – $13
-
Suffolk County, NY – $13
-
Westchester County, NY – $13
-
-
South Dakota – $9.30
-
Washington – $13.50
-
Seattle – $15.75
-
3. Limits for parking and mass transit reimbursement increase
Some families like to include reimbursement for mass transit services (buses, light rail, etc.) and parking as part of their caregiver’s payroll. This is because it’s less expensive than having your caregiver pay for it out of their own pocket. The reason is because these benefits are not considered taxable income — meaning neither you nor your caregiver will owe taxes on the amount of parking and/or mass transit expense that are agreed upon.
For 2020, the maximum benefit is $270 per month (up from $265 per month), however, if you live in Massachusetts, parking reimbursement is capped at $140 per month.
These are just the changes that take effect at the beginning of 2020. If you ever want to know what’s required for hiring a caregiver in your state, you can always reference this state-by-state guide to answer your questions.
