There is a lot of talk on the Fiscal Cliff and what may change for employees and employers. We thought we would share with you what that means for household employers.
Here are the three most important things you need to know for your 2013 household employee.
- The Payroll Tax Holiday Has Expired. The social security tax has reverted to its traditional 6.2% (it was temporarily reduced to 4.2% in 2011 and 2012 in an attempt to stimulate consumer spending). The change will decrease take-home pay for all U.S. workers. Your full-time nannies will see a change of about $10-$15 per week, depending on their income level.
- The FICA Reporting Threshold Did Not Change. The $1,800 threshold has been extended through 2013. Families who pay a worker less than that amount are absolved of the FICA reporting responsibilities under the "casual babysitting exemption."
- The Federal Mileage Reimbursement Rate Has Increased. The rate for mileage reimbursement increased by one penny per mile. It's now 56.5 cents for each mile an employee drives on the job.
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