your To-Do list just got shorter
You are onboard with paying your household employee legally, using Nest Payroll. Great, you just crossed off some MAJOR to-do’s from your list. Below you’ll see some simple steps that only you can do. As part of being a subscriber to the Nest Payroll service, you’ll receive reminders and guidance for these steps as well, but here they are in a nutshell:
I-9 Form Make sure your employees are legal to work. Ask them to fill out an I-9, and then file it in a safe place if you ever get audited. Get the I-9 form here.
W4 Form We do all the tax calculations for any withholdings! All you need to do is have your employee fill out the W-4, so the employee can specify how much to withhold from their paycheck. In the app, under each employee profile, select “Edit” and you can adjust the withholdings based on each employee’s W4. This is an area where it differs from non-household employees. You are not required to withhold income tax, but this means your employees will owe at the end of the year, which could be a burden for them. Since you are using Nest Payroll, it’s no extra work for you, and this is another way you can take care of your employees. Keep the W4 in a safe place with the I-9 forms.
FEDERAL EIN We do this for you!
STATE REGISTRATION We do this for you!
NEW HIRE REPORT We do this for you!
WORKERS' COMPENSATION This is insurance to protect you and your employee, not a tax, and it's mandatory in many states even if you have just one part-time employee (and worth the peace of mind for the protection it provides your family). Check your homeowners' or renters' insurance to see if you already have some coverage. For example, you might be covered if your nanny works less than 20 hours/week. Or you might need to supplement with an "endorsement" for a household employee who works more than 20 hours/week. A typical cost for an endorsement is about $600/year. Every insurance company is different so you need to check. For California, you can read more here and Nolo also has a good summary.
OVERTIME Nest Payroll will calculate overtime, but you need to know the rules: In California, over 8 hours in one day, as well as over 40 hours in one week, is calculated at 1.5x the hourly rate (you can easily enter regular and overtime hours into the Nest Payroll app). See California’s overtime rules here: https://www.dir.ca.gov/dlse/DomesticWorkerBillOfRights-FAQ.html
LEGAL PAY STUB We do this for you!
FILE QUARTERLY TAXES TO YOUR STATE We do this for you!
EVERY QUARTER - FEDERAL File and pay your estimated taxes through the Federal Form 1040-ES each quarter (or increase your withholdings through your employer), so you don't owe penalties at the end of the year. Here’s how to easily do this.
YEAR END COMPLIANCE We do this for you! We provide a W2 for each of your employees, and prepare and file Copy A of Form W-2 and Form W-3 to the SSA (Social Security Administration).
FOR TAX TIME We do this for you! You will receive a signature ready Schedule H that you attach to your personal tax return (Form 1040).