Welcome To NannyPay News
Volume 1, Issue 2 (September 2004)
It is intended to provide household employers and NannyPay users with information about employment issues, tax tips, NannyPay software tips, and other items of interest in a brief, easy-to-read format.
If you have any comments or suggestions about our newsletter, please let us know by emailing us at: newsletter@essentia-soft.com. We look forward to your feedback.
Is Your Nanny "Legal"?
Finding the right nanny for your child is a tough job, but once you do, you must determine whether your new employee is "legal", that is, eligible to work in the United States. Simply put: it is against the law to employ an alien who isn’t legally allowed to work in the United States.
When you hire someone to work for you in your household, you become an "employer" and, therefore, subject to Immigration and Naturalization Service employment requirements. Therefore, you and your nanny are required to complete INS Form I-9, Employment Eligibility Verification on his or her first day of work. Form I-9 requests identification information from your new employee and a statement that he or she is eligible to work in the U.S. Typically, your employee will show you a copy of his or her Social Security card as proof of employment eligibility. Make a note of that number because you will need it when you prepare your nanny's Form W-2 at the end of this year. Also, remember to fill out your part of Form I-9.
You do not file or send Form I-9 to the government. Instead, you must keep it with your records in the event that you are required to prove that your nanny is not an illegal alien. Download and read the instructions to Form I-9 for more information.
Nanny Tax Tip — Avoid Form W-2 Penalties
If you're new to administering a household payroll, you should be aware that the Internal Revenue Service (IRS) requires employers to provide, by no later than January 31st of 2005, a 2004 W-2 earnings and withholding summary for each employee to whom you paid at least $1,400 in wages in 2004. The IRS also requires you to file a Form W-3, which is a consolidated summary of all your employees' W-2's. Be sure to double-check your information on each W-2 you issue, including the name and social security number (SSN) of your employee or employees.
The IRS can assess up to a $50 penalty for each W-2 which has a missing social security number (SSN) or if the employee's name on the form does not match the SSN provided. If you receive a notice from the IRS of a Form W-2 name/SSN mismatch, don't ignore this notice! Verify and obtain the correct information from your employee and provide that information to the IRS promptly. The penalty can be waived or reduced if you provide the corrected information promptly and can show the mistake was not due to your willful neglect.
NannyPay Tip — How to Print a Form W-2
NannyPay can assist you with your Form W-2 obligation by printing a W-2 for each of your employees on a pre-printed form. This may sound a little confusing but the IRS requires that Form W-2's be printed on machine readable paper. As a convenience to our customers who choose to provide their employees with printed W-2s, Essentia Software sells IRS-approved, blank forms in small quantities, which can be purchased from our website at www.nannypay.com in December, through the following year. Also, you should check for a software update in late November or early December when Essentia Software updates NannyPay with the most current Form W-2 information. When you're ready to print your W-2, here's how:
- Click on menu item "Forms:W-2," which will present you with a filled-in image of a W-2.
- Check the payment and withholding numbers and make any necessary changes.
- Perform a test print by placing a blank sheet of paper in your printer and clicking the "Test Print" button. Compare the results by holding the test page up against your blank pre-printed form. Make any alignment changes using the alignment adjustment buttons.
- Choose where you want to print your W-2 -- on the top or bottom of the pre-printed form -- by clicking the appropriate button.
- Place your blank forms in the printer and click "Print W-2".
If you choose not to print a Form W-2, you can still gather year-end payroll information by running a W-2 report. To print a report, click "Form W-2" under the "Reports" menu and click the "W-2 Report" button on the W-2 screen. NannyPay does not generate a consolidated Form W-3 for more than one employee; you will have to do that manually. We anticipate that the next major release of NannyPay will incorporate that ability, so keep on the lookout in 2005. Remember, for your Form W-2 needs visit www.nannypay.com in December.