{"id":207,"date":"2024-04-15T19:05:40","date_gmt":"2024-04-15T19:05:40","guid":{"rendered":"https:\/\/s37407.p1377.sites.pressdns.com\/homepay\/how-to-include-non-taxable-benefits-into-your-caregivers-payroll\/"},"modified":"2024-04-15T19:05:40","modified_gmt":"2024-04-15T19:05:40","slug":"non-taxable-compensation","status":"publish","type":"post","link":"https:\/\/www.care.com\/hp\/non-taxable-compensation\/","title":{"rendered":"How to include non-taxable benefits into your caregiver&#8217;s payroll"},"content":{"rendered":"<p>When setting up payroll for your household employee, it&rsquo;s worth your time to consider adding one, or several benefits, as part of their total pay. Specifically, the IRS has a set of what they call &ldquo;<a href=\"https:\/\/www.irs.gov\/publications\/p15b\" target=\"_blank\" rel=\"noreferrer noopener\">fringe benefits<\/a>&rdquo; that are considered non-taxable forms of compensation. This means the value of those benefits when added to your nanny or senior caregiver&rsquo;s payroll are not subject to taxes for you or them.<\/p><div class=\"wp-block-image is-resized\"><figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.care.com\/app\/hp-enrollment\/signup\"><img decoding=\"async\" width=\"338\" height=\"56\" src=\"https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2021\/05\/tbf-sign-up-button.png\" alt=\"\" class=\"wp-image-578\" srcset=\"https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2021\/05\/tbf-sign-up-button.png 338w, https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2021\/05\/tbf-sign-up-button-300x50.png 300w\" sizes=\"(max-width: 338px) 100vw, 338px\"><\/a><\/figure><\/div><div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div><h3 class=\"wp-block-heading\" id=\"h-2024-nbsp-irs-approved-non-taxable-compensation-benefits-for-household-employers\"><strong>2024&nbsp;IRS-approved non-taxable compensation benefits for household employers<\/strong><\/h3><ul class=\"wp-block-list\"><li><p dir=\"ltr\">Health Insurance premiums from a state-licensed insurance provider.<\/p><strong>Note:<\/strong> If you have multiple employees, you must set up an <a href=\"https:\/\/www.takecommandhealth.com\/homepay-reimbursement\" target=\"_blank\" rel=\"noreferrer noopener\">Individual Coverage Health Reimbursement Arrangement<\/a> (ICHRA),&nbsp;<a href=\"https:\/\/www.irs.gov\/pub\/irs-drop\/n-17-67.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Qualified Small Employer Health Reimbursement Arrangement<\/a> (QSEHRA) or purchase a policy through SHOP (<a href=\"https:\/\/www.healthcare.gov\/small-businesses\/employers\/\" target=\"_blank\" rel=\"noreferrer noopener\">Small Business Health Options Program<\/a>) to gain this benefit.<\/li><\/ul><ul class=\"wp-block-list\"><li><p dir=\"ltr\">Up to $315 per month toward public transportation to and from the worksite.<\/p><\/li><li><p dir=\"ltr\">Up to $315 per month toward parking at the jobsite and\/or at the public transportation facility.<\/p><\/li><li><p dir=\"ltr\">Cell phone service reimbursement, provided that using the phone is a necessary requirement of the job.<\/p><\/li><li><p dir=\"ltr\">Up to $5,250 per year towards tuition &amp; books for an accredited college or university.<\/p><\/li><\/ul><p>&ldquo;Using any number of non-taxable benefits means your caregiver&rsquo;s gross wages are lowered by the value of the benefits you provide,&rdquo; says Tom Breedlove, Sr. Director of <a href=\"https:\/\/www.care.com\/homepay\">Care HomePay<\/a>. &ldquo;So when you&rsquo;re calculating how much in taxes you have to withhold from your caregiver and pay on your own, you use this lower value, which ultimately saves you and you caregiver money.&rdquo;<\/p><h3 class=\"wp-block-heading\" id=\"h-a-payroll-example-using-non-taxable-benefits\"><strong>A payroll example using non-taxable benefits<\/strong><\/h3><p>Say you&rsquo;re paying your caregiver $600 per week with no additional benefits added and they fill out their Form W-4 as Single with no dependents. Each pay period, this is what your care budget and their net pay will be approximately:<\/p><figure class=\"wp-block-table aligncenter is-style-stripes\"><table><thead><tr><th scope=\"col\">Your Caregiver:<\/th><th scope=\"col\">Your Care Budget:<\/th><\/tr><\/thead><tbody><tr><td>Gross wages &ndash; $600<\/td><td>Gross wages &ndash; $600<\/td><\/tr><tr><td>Taxes withheld &ndash; $95.71<\/td><td>Employer taxes &ndash; $53.49<\/td><\/tr><tr><td>Take-home pay = $504.26<\/td><td>Total weekly cost = $653.49<\/td><\/tr><\/tbody><\/table><\/figure><p>Now take the same caregiver, but you&rsquo;ve decided to include $25 per week in health insurance and $50 per week for public transportation as part of their payroll. So even though you&rsquo;re paying them $600 per week, you&rsquo;re now excluding $75 of that from taxes. Let&rsquo;s look at how weekly payroll looks now:<\/p><figure class=\"wp-block-table aligncenter is-style-stripes\"><table><thead><tr><th scope=\"col\">Your Caregiver:<\/th><th scope=\"col\">Your Care Budget:<\/th><\/tr><\/thead><tbody><tr><td>Gross wages &ndash; $525<\/td><td>Gross wages &ndash; $525<\/td><\/tr><tr><td>Taxes withheld &ndash; $80.97<\/td><td>Employer taxes &ndash; $46.90<\/td><\/tr><tr><td>Non-taxable benefits &ndash; $75<\/td><td>Non-taxable benefits &ndash; $75<\/td><\/tr><tr><td>Take-home pay = $519.03<\/td><td>Total weekly cost = $646.90<\/td><\/tr><\/tbody><\/table><\/figure><p>As you can see, in this scenario, the caregiver is&nbsp;actually <em>saving <\/em>$15 per week with these benefits added to their payroll. It may seem like&nbsp;a small amount, but over the course of the year, it&rsquo;s a nearly $800 difference.<\/p><p>For your household employment taxes, you&rsquo;re saving $6.59 per week &ndash; or $342.68 for the year. Every little bit helps if you&rsquo;re on a tight budget, so the work in setting up payroll this way from the beginning is probably worth it. The experts at <a href=\"https:\/\/www.care.com\/homepay\">HomePay<\/a> are happy to help you budget for your caregiver&rsquo;s payroll by including any of these forms of non-taxable compensation. Give us a call and we&rsquo;ll work through the details together.<\/p><div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div><p><strong>Next Steps:<\/strong><\/p><ul class=\"wp-block-list\"><li><a href=\"https:\/\/www.care.com\/hp\/nanny-pay-rates-how-much-should-i-pay-my-nanny\">See how much to pay your nanny to help set your care budget<\/a><\/li><li><a href=\"https:\/\/www.care.com\/hp\/7-steps-for-creating-a-nanny-payroll-account\">Learn more about how to set up payroll for a caregiver<\/a><\/li><li><a href=\"https:\/\/www.care.com\/hp\/nanny-tax-breaks-and-deductions\">Read about other tax breaks to save you money<\/a><\/li><\/ul>","protected":false},"excerpt":{"rendered":"<p>The experts at HomePay show how including parking, health insurance, transit service or tuition into payroll can result in tax savings.<\/p>\n","protected":false},"author":1329,"featured_media":770,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"enable_toc":false,"care_reviewed_by":0,"care_post_updated_flag":false,"care_updated_date":"","last_update":"2024-04-15","view_count":4674,"footnotes":""},"categories":[1],"tags":[],"member-type":[2],"vertical":[3,365],"platform":[11],"class_list":["post-207","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","member-type-seeker","vertical-children","vertical-payroll-topics-for-families","platform-homepay"],"acf":[],"created":"2016-12-21","_links":{"self":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts\/207","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/users\/1329"}],"replies":[{"embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/comments?post=207"}],"version-history":[{"count":4,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts\/207\/revisions"}],"predecessor-version":[{"id":3917,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts\/207\/revisions\/3917"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/media\/770"}],"wp:attachment":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/media?parent=207"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/categories?post=207"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/tags?post=207"},{"taxonomy":"member-type","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/member-type?post=207"},{"taxonomy":"vertical","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/vertical?post=207"},{"taxonomy":"platform","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/platform?post=207"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}