{"id":207,"date":"2024-04-15T19:05:40","date_gmt":"2024-04-15T19:05:40","guid":{"rendered":"https:\/\/s37407.p1377.sites.pressdns.com\/homepay\/how-to-include-non-taxable-benefits-into-your-caregivers-payroll\/"},"modified":"2024-04-15T19:05:40","modified_gmt":"2024-04-15T19:05:40","slug":"non-taxable-compensation","status":"publish","type":"post","link":"https:\/\/www.care.com\/hp\/non-taxable-compensation\/","title":{"rendered":"How to include non-taxable benefits into your caregiver&#8217;s payroll"},"content":{"rendered":"\n<p>When setting up payroll for your household employee, it\u2019s worth your time to consider adding one, or several benefits, as part of their total pay. Specifically, the IRS has a set of what they call \u201c<a href=\"https:\/\/www.irs.gov\/publications\/p15b\" target=\"_blank\" rel=\"noreferrer noopener\">fringe benefits<\/a>\u201d that are considered non-taxable forms of compensation. This means the value of those benefits when added to your nanny or senior caregiver\u2019s payroll are not subject to taxes for you or them.<\/p>\n\n\n<div class=\"wp-block-image is-resized\">\n<figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.care.com\/app\/hp-enrollment\/signup\"><img decoding=\"async\" width=\"338\" height=\"56\" src=\"https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2021\/05\/tbf-sign-up-button.png\" alt=\"\" class=\"wp-image-578\" srcset=\"https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2021\/05\/tbf-sign-up-button.png 338w, https:\/\/www.care.com\/hp\/wp-content\/uploads\/sites\/3\/2021\/05\/tbf-sign-up-button-300x50.png 300w\" sizes=\"(max-width: 338px) 100vw, 338px\" \/><\/a><\/figure><\/div>\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2024-nbsp-irs-approved-non-taxable-compensation-benefits-for-household-employers\"><strong>2024&nbsp;IRS-approved non-taxable compensation benefits for household employers<\/strong><\/h3>\n\n\n\n<ul>\n<li><p dir=\"ltr\">Health Insurance premiums from a state-licensed insurance provider.<\/p><strong>Note:<\/strong> If you have multiple employees, you must set up an <a href=\"https:\/\/www.takecommandhealth.com\/homepay-reimbursement\" target=\"_blank\" rel=\"noreferrer noopener\">Individual Coverage Health Reimbursement Arrangement<\/a> (ICHRA),&nbsp;<a href=\"https:\/\/www.irs.gov\/pub\/irs-drop\/n-17-67.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Qualified Small Employer Health Reimbursement Arrangement<\/a> (QSEHRA) or purchase a policy through SHOP (<a href=\"https:\/\/www.healthcare.gov\/small-businesses\/employers\/\" target=\"_blank\" rel=\"noreferrer noopener\">Small Business Health Options Program<\/a>) to gain this benefit.<\/li>\n<\/ul>\n\n\n\n<ul>\n<li><p dir=\"ltr\">Up to $315 per month toward public transportation to and from the worksite.<\/p><\/li>\n\n\n\n<li><p dir=\"ltr\">Up to $315 per month toward parking at the jobsite and\/or at the public transportation facility.<\/p><\/li>\n\n\n\n<li><p dir=\"ltr\">Cell phone service reimbursement, provided that using the phone is a necessary requirement of the job.<\/p><\/li>\n\n\n\n<li><p dir=\"ltr\">Up to $5,250 per year towards tuition &amp; books for an accredited college or university.<\/p><\/li>\n<\/ul>\n\n\n\n<p>\u201cUsing any number of non-taxable benefits means your caregiver\u2019s gross wages are lowered by the value of the benefits you provide,\u201d says Tom Breedlove, Sr. Director of <a href=\"https:\/\/www.care.com\/homepay\">Care HomePay<\/a>. \u201cSo when you\u2019re calculating how much in taxes you have to withhold from your caregiver and pay on your own, you use this lower value, which ultimately saves you and you caregiver money.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-a-payroll-example-using-non-taxable-benefits\"><strong>A payroll example using non-taxable benefits<\/strong><\/h3>\n\n\n\n<p>Say you\u2019re paying your caregiver $600 per week with no additional benefits added and they fill out their Form W-4 as Single with no dependents. Each pay period, this is what your care budget and their net pay will be approximately:<\/p>\n\n\n\n<figure class=\"wp-block-table aligncenter is-style-stripes\"><table><thead><tr><th scope=\"col\">Your Caregiver:<\/th><th scope=\"col\">Your Care Budget:<\/th><\/tr><\/thead><tbody><tr><td>Gross wages &#8211; $600<\/td><td>Gross wages &#8211; $600<\/td><\/tr><tr><td>Taxes withheld &#8211; $95.71<\/td><td>Employer taxes &#8211; $53.49<\/td><\/tr><tr><td>Take-home pay = $504.26<\/td><td>Total weekly cost = $653.49<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Now take the same caregiver, but you\u2019ve decided to include $25 per week in health insurance and $50 per week for public transportation as part of their payroll. So even though you\u2019re paying them $600 per week, you\u2019re now excluding $75 of that from taxes. Let\u2019s look at how weekly payroll looks now:<\/p>\n\n\n\n<figure class=\"wp-block-table aligncenter is-style-stripes\"><table><thead><tr><th scope=\"col\">Your Caregiver:<\/th><th scope=\"col\">Your Care Budget:<\/th><\/tr><\/thead><tbody><tr><td>Gross wages &#8211; $525<\/td><td>Gross wages &#8211; $525<\/td><\/tr><tr><td>Taxes withheld &#8211; $80.97<\/td><td>Employer taxes &#8211; $46.90<\/td><\/tr><tr><td>Non-taxable benefits &#8211; $75<\/td><td>Non-taxable benefits &#8211; $75<\/td><\/tr><tr><td>Take-home pay = $519.03<\/td><td>Total weekly cost = $646.90<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>As you can see, in this scenario, the caregiver is&nbsp;actually <em>saving <\/em>$15 per week with these benefits added to their payroll. It may seem like&nbsp;a small amount, but over the course of the year, it\u2019s a nearly $800 difference.<\/p>\n\n\n\n<p>For your household employment taxes, you\u2019re saving $6.59 per week &#8211; or $342.68 for the year. Every little bit helps if you\u2019re on a tight budget, so the work in setting up payroll this way from the beginning is probably worth it. The experts at <a href=\"https:\/\/www.care.com\/homepay\">HomePay<\/a> are happy to help you budget for your caregiver&#8217;s payroll by including any of these forms of non-taxable compensation. Give us a call and we&#8217;ll work through the details together.<\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><strong>Next Steps:<\/strong><\/p>\n\n\n\n<ul>\n<li><a href=\"https:\/\/www.care.com\/hp\/nanny-pay-rates-how-much-should-i-pay-my-nanny\">See how much to pay your nanny to help set your care budget<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.care.com\/hp\/7-steps-for-creating-a-nanny-payroll-account\">Learn more about how to set up payroll for a caregiver<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.care.com\/hp\/nanny-tax-breaks-and-deductions\">Read about other tax breaks to save you money<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The experts at HomePay show how including parking, health insurance, transit service or tuition into payroll can result in tax savings.<\/p>\n","protected":false},"author":1329,"featured_media":770,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"enable_toc":false,"care_post_updated_flag":false,"care_updated_date":"","last_update":"2024-04-15","view_count":4193,"footnotes":""},"categories":[1],"tags":[],"member-type":[2],"vertical":[3,365],"platform":[11],"acf":[],"created":"2016-12-21","_links":{"self":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts\/207"}],"collection":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/users\/1329"}],"replies":[{"embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/comments?post=207"}],"version-history":[{"count":3,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts\/207\/revisions"}],"predecessor-version":[{"id":2960,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/posts\/207\/revisions\/2960"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/media\/770"}],"wp:attachment":[{"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/media?parent=207"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/categories?post=207"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/tags?post=207"},{"taxonomy":"member-type","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/member-type?post=207"},{"taxonomy":"vertical","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/vertical?post=207"},{"taxonomy":"platform","embeddable":true,"href":"https:\/\/www.care.com\/hp\/wp-json\/wp\/v2\/platform?post=207"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}