Recently, the President signed a series of Executive Actions with the intent of helping those struggling with the effects of the current COVID-19 landscape. Two in particular directly affect families with nannies, senior caregivers or other household employees:
As with any new legislation, you’re bound to have questions, so we’ll cover these two Executive Orders in as much detail as we currently have. Things may change on the federal or state level, so check back with this page again for updates.
What the Lost Wages Assistance program does for your employee
Under the CARES Act, your employee was granted 13 weeks of an additional $600 of unemployment benefits on top of what the state would normally pay. This ran out for all workers on July 31, so the Lost Wage Assistance program is the next attempt to help those that have lost their job due to COVID-19.
Your employee may be eligible to receive an extra $400 per week on top of state benefits through December 27 if they lose their job due to COVID-19. The federal government provides $300 of the benefits and the state provides the remaining $100. Each state must agree to this arrangement and set up a new system to administer the benefits so it’s possible that your state will not be able to provide immediate benefits if your employee unfortunately loses their job.
Remember that the distribution of unemployment benefits is irrelevant to employees paid under the table. That’s why it’s important for families to pay their household employees on the books so they can qualify for this safety net if needed.
How the payroll tax deferment affects your nanny or caregiver’s taxes
You may be hearing this called a “payroll tax holiday,” but what’s happening is that employees earning less than $4,000 bi-weekly are able to push back paying the Social Security taxes owed on their wages from Sept. 1 through Dec. 31, 2020. Those taxes would be evenly collected one pay period at a time from Jan. 1 through Apr. 30, 2021.
While you’re not required to withhold Social Security taxes from your employee at the moment, we highly recommend you continue doing so while we wait on further guidance from Congress on what will happen to these taxes. In the interest of transparency, you may want to explain this to your employee because they’re probably paying attention to the news and may be hearing about this topic.
Our comprehensive service was built for trying times like these when families are stretched for their time and new laws are being passed. We take all the work and worry out of managing your household employee so you can focus on your family and what’s best for them. Give us a call today and never waste another minute of your time looking up tax, payroll or labor law regulations again!
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