Be updated with the tax changes this 2023 if you have household employees. (Photo: First Church Preschool)
You need to familiarize yourself with some tax changes this 2023 if you hire nannies or other household employees. While some differences may apply to your situation, reviewing the rules is a good idea.
Payroll Taxes
According to the IRS, federal payroll taxes such as Social Security and Medicare apply when you pay household employees $2,600 or more in wages in 2023. This amount has increased from $2,400 last year.
Qualified Parking Exclusion and Commuter Transit Benefit
The monthly exclusion for suitable parking is $300 in 2023, as is the monthly exclusion for commuter highway vehicle transportation and transit passes. Both have increased from $280 in 2022. Care.com HomePay states these non-taxable benefits can be included in a household employee’s pay.
READ ALSO: 2023 Major Tax Changes to Affect Refundable Amount
Be updated with the tax changes this 2023 if you have household employees. (Photo: NannyPay)
Sick and Family Leave
If you pay qualified sick and family leave wages to household employees in 2023 for leave taken after March 31, 2020, and before October 1, 2021, you can claim a credit for the wages in 2023.
Minimum Wage
Although the federal minimum wage of $7.25 per hour has yet to be raised since 2009, many states have higher minimums, with many raising them this year. Payroll taxes for household employees may change as a result of higher minimum wages.
Arizona, California, Colorado, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, South Dakota, Virginia, and Washington will have higher minimum wages in 2023. To ensure you comply with the new pay rates, consult Care.com HomePay’s state-by-state guides.
READ ALSO: Changes in Tax Bracket Caused by Inflation
