March 7, 2017
By Guy Maddalone, Founder & CEO, GTM Payroll Services
It’s tax season! Filing a tax return can be stressful if you’re not prepared. Set yourself up for success by taking these steps beginning at the time of hire.
Submit Form W-4 before you start work
Your employer (the family you’ll work for) should issue you a Form W-4 before you start work. Form W-4 indicates how much income tax your employer should withhold from your wages each pay period and remit to the federal government (and state government if your state has an income tax) on your behalf.
Know the difference between ‘employee’ and ‘independent contractor’
The IRS has made it clear that a nanny is considered an employee. You are not an independent contractor. You should not be issued a Form 1099 at the end of the year. Independent contractors are responsible for paying both the employee and employer portions of Social Security and Medicare (FICA) taxes. Employees pay their share and with their family contributing the employer portion.
Plan on regular tax withholdings
You and your employer can agree not to withhold income tax. But then your entire tax responsibility will be due before the filing deadline. Withholding throughout the year puts you in better shape to meet your tax obligation. You may even receive money back if your total tax responsibility is less that what you have already paid throughout the year.
Get a W-2 from your employer by January 31
As an employee, you should have received Form W-2 by January 31 for the previous year. Form W-2 will indicate how much you received in wages and the amount that was withheld in taxes for the year. You’ll need this document to complete your tax return. Talk to your family if you haven’t received your W-2. They may have tried to mail (or email) it to you but had an incorrect address.
Take action if you don’t have your W-2
If you still haven’t received your W-2 by mid-February, contact the IRS toll-free at (800) 829-1040. You may want to mention to your family that you plan to take this step. It may prompt them to provide your W-2. If not, and you call the IRS, you’ll need to provide your employer’s address and phone number as well as your dates of employment, estimated wages earned and federal tax withheld. The IRS will follow up with your employer about the missing W-2.
Finish your tax documents and submit by the deadline
Even if you do not receive your W-2, you still need to file a tax return by the April 18, 2017 deadline.* You’ll need to estimate your wages earned and federal tax withheld. Year-to-date information should be indicated on your final pay stub of the year. Attach Form 4852 (Substitute for Form W-2, Wage and Tax Statement) to your return. If you receive your W-2 after you filed your return (using Form 4852), file an amended return using Form 1040X (Amended U.S. Individual Tax Return).
File a return even if you’re not required
If your gross income is below a threshold based on your filing status, age, and whether you are a dependent, you don’t need to file a return. Check this IRS table before deciding not to file. Also, if you meet one of these other conditions, you must file a return.
However, if you had income tax withheld from your pay or qualify for certain tax credits, you should file a return to get your money back.
* – The tax return filing deadline is later than usual in 2017.
GTM Payroll Services has specialized in easy-to-use payroll solutions for families with household employees ever since our founding in 1991. Our offerings include payroll management, tax filings, workers’ compensation policies and employee benefits like health insurance and 401k plans. Visit GTM.com/household.