COVID-19 continues to challenge parents on ways to fulfill their child care needs. With day care closures and fall school openings in question, some parents are considering private, shared care solutions with a small group of families to fill the gap. Known as remote learning pods, pandemic pods or microschools, these options have been relatively uncommon over the years, so many families are wondering how to set them up correctly. The good news is that we’re on top of the <\/span>tax, payroll and compliance requirements<\/span><\/span><\/a> and can help answer a lot of the questions you may have.<\/span><\/span><\/span><\/p>
In simplistic terms, these setups are similar to a <\/span>nanny share<\/span><\/span><\/a> in that a group of families with similar care needs come together to hire a trained caregiver. Where there is some uniqueness now is that the person being hired in a learning pod has the skill set you’d expect from a day care or child learning center worker. This is a little different from hiring a nanny because more of the focus is on education for young children. <\/span><\/span><\/span><\/p>
Many parents are referring to this setup as a microschool, but the idea is similar to a learning pod because they’re looking for a way to have a trained educator come to their home to teach a group of children. The difference with this setup is that the instructor is generally a teacher or tutor and provides their own curriculum that most likely mirrors what is taught at your child’s school. Parents don’t have nearly as much input on how learning and instruction is handled, which is why many of these instructors will charge a tuition rate like you’d see at a private school or day care.<\/span><\/span><\/span><\/p>
Like other caregiving scenarios, <\/span>this is dependent on who is in control of the details of the working relationship<\/em>. If the families in a learning pod or care share come together to agree on a set of tasks they want the caregiver to perform, and are dictating the hours the caregiver works and the days in which they work, the caregiver will most likely be an employee of each family, according to the IRS. This is true for both caregivers working full time with younger children, as well as someone providing part-time group tutoring to school-aged kids.<\/span><\/span><\/span><\/p>
Usually someone that is an independent contractor has gone through the process of setting up a business. You and the other parents typically will have to work around their availability, and they will provide the curriculum and daily schedule the kids will follow without much additional input. If the person has to miss a day of instruction, they will provide a suitable substitute. All families in your learning group will pay the person the rate they request and they will take care of providing everything the children need for care and learning.<\/span><\/span><\/span><\/p>
Read more about <\/span>the differences between employees and self-employed independent contractors<\/span><\/span><\/a>.<\/span><\/span><\/span><\/p>
If the person your group is hiring is in a gray area somewhere between both of these scenarios, the conservative approach would be to treat them as your employee. The reason being is because independent contractors should only receive payment for the job they perform, whereas employees often receive other benefits like paid time off and sick days. <\/span><\/span><\/span><\/p>
If you’re providing these additional benefits, but treating the person as an independent contractor, there is potential risk if the caregiver or instructor files a wage dispute. When the state reviews the claim, they will wonder why benefits that are meant for employees were given to someone not classified as such. However, treating the person as an employee from the start doesn’t carry additional risk to you or the other families involved.<\/span><\/span><\/span><\/p>
Assuming the caregiver meets the definition of a household employee, each family will evenly split the cost of hiring them. For example, if there are four families in your remote learning pod and you agree to pay the caregiver a total of $2,000 per week, each family would be responsible for $500 in gross wages and would need to withhold the appropriate taxes from this amount each week. Each family will also need to register as a household employer with the IRS and the state so they can file tax returns throughout the year and send in the taxes withheld from the caregiver and the taxes owed as a household employer.<\/span><\/span><\/span><\/p>
Yes, we are equipped to manage all the federal and state tax and payroll requirements on your behalf. And by <\/span>utilizing our service<\/span><\/span><\/a> to pay your caregiver legally, you’ll be able to <\/span>qualify for tax breaks<\/span><\/span><\/a> to reduce the cost of hiring them. In fact, many families in a nanny share or learning pod will save more money in tax breaks than they will owe in household employment taxes. Just reach out to us and we’ll be happy to crunch the numbers for you to give you a detailed budget.<\/span><\/span><\/span><\/p>
Next steps:<\/strong><\/span><\/span><\/p>
Read through the FAQs about using HomePay<\/span><\/span><\/a><\/span><\/span><\/p><\/li>
Check the specific tax and payroll laws in your state<\/span><\/span><\/a><\/span><\/span><\/p><\/li>
Learn more about the benefits of paying your caregiver legally<\/span><\/span><\/a><\/span><\/span><\/p><\/li><\/ul>","protected":false},"excerpt":{"rendered":"