The American Rescue Plan Act substantially enhanced the Child and Dependent Care Tax Credit renewing interest in this savings on childcare expenses. Wages paid to a nanny qualify for the credit. Here is everything a family with a nanny or other childcare needs to know about claiming this tax credit on their personal tax return.
Summer is a popular time for minimum wage rate increases that apply to nannies and other household employees. It’s important to check the rate you’re paying a household worker to make sure it is not a wage violation. Rates are on the rise in several states and cities across the country.
The pandemic, staffing shortages, and tax law changes have all helped create a massive backlog in resolving tax notices as well as processing income tax returns and estimated tax payments. What can household employers expect?
President Biden is proposing unprecedented funding for the IRS to reduce tax evasion and better conduct audits of wealthy Americans. The administration wants to use money raised from cracking down on tax avoidance to help fund the new social programs of the American Families Plan.
Virginia’s minimum wage rate, which has been the same as the federal rate for several years, is set to increase in 2021 and then periodically for the next few years until it’s tied to inflation beginning in 2027.
It’s always the right thing to do, but with expanded childcare tax credits and increased contribution limits on Dependent Care FSAs through the American Rescue Plan, paying your nanny legally may now be cheaper than “under the table.”
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