4 Major Changes to Household Employment in 2018
Tax withholding threshold, minimum wage and paid sick time among the significant changes
Every year, we see changes to household employment, payroll, tax, labor and HR-related laws. 2018 is no different and there are significant changes to pay attention to. Here are the four major areas impacting families once the New Year begins:
1) The Nanny Tax threshold increases to $2,100. This is how much families can pay a household employee (nanny, senior caregiver, personal assistant, etc.) before they are responsible for withholding taxes from their pay and paying employment taxes of their own. The $2,100 threshold is up from $2,000 the previous two years and applies to the entire calendar year. This is especially important for families hiring temporary employees or summer nannies to pay attention to.
2) Minimum wage increases in 16 states, 16 cities and 3 counties. While federal minimum wage has not increased from $7.25 per hour since 2009, states, cities and counties are free to enact their own minimum wage rates. When multiple minimum wage rates are present, families must follow the higher rate. Please check the requirements in your state to make sure youre in compliance.
3) Paid sick leave laws go into effect in Washington, Vermont, St. Paul, MN. Over the past few years, there has been a growing trend of guaranteeing paid sick time for employees. Starting in 2018, there will now be 6 states, 24 cities and 2 counties that require paid sick time or paid time off for household employees.
4) Mileage reimbursement rate increases to 54.5 cents per mile. The IRS sets this rate every year and increased it from 53.5 cents per mile in 2017. A few states require mileage reimbursement, but we recommend all families reimburse their household employee if they require them to drive their vehicle while on the clock. Miles driven commuting to and from the familys home do not count as reimbursement miles.
If you have any further questions about these changes or anything related to managing your household employee, give HomePay a call. Were here to help!