CONTACT US: HELLO@NESTPAYROLL.COM
Q. What can Nest Payroll do for me?
A. If you have a household employee, like a nanny, caregiver or a housekeeper, whom you will pay more than $2,100/per year (tax year 2019), then Nest Payroll was built for you.
Nest Payroll is an easy to use mobile app that provides peace of mind by keeping you legal when you pay. You will avoid fines and tax penalties, plus be eligible to apply for dependent care tax breaks if you are paying someone to care for your child, spouse or dependent.
Paying legally helps you keep a professional relationship with your employee. Your employee will have peace of mind from unemployment and disability, and build up social security and Medicare credits. Your employee will also have documented income, which means being able to apply for car, school or home loans, or even being able to rent an apartment.
In addition, Nest Payroll will save you at least over 60 hours during the year. If you were to do payroll without help, that’s the average time the IRS calculates you would need to spend. We actually think it’s worse than that!
Nest Payroll is easy for you to use, starting with a quick setup. Once you sign up and complete your employer and employee profile, Nest Payroll will handle new hire reports, get your tax IDs, produce paystubs, file for you, and provide all year-end requirements including W2s and a “ready for signature” Schedule H for your tax return.
Q. How much does Nest Payroll cost?
A. To enroll for the service, it’s a straightforward monthly subscription for $28/month. There are no set-up, year-end or state fees, unlike other services.
What’s Included? Everything you need.
Instant Paycheck calculations: Pay your household employee right away, the right way.
Instant Pay Stubs: Print, email or text a legal pay stub to your employee.
Pay your employee two ways: Write a check or pay seperately through your favorite electronic payment method such as PayPal or Venmo. Direct deposit options coming soon!
Employer registration for Federal and State EIN’s: We do this for you.
New Employee Reports to your state taken care of by us.
CA State Filing: Quarterly filing and tax payments made on your behalf.
Federal 1040ES payments made for you each quarter (estimated payments).
Federal Year-End: Employee W2s provided.
W2/W3s filed for you.
Schedule H Form signature-ready for April tax time.
Year to date tax reports always at your fingertips. Share easily with your Accountant!
Trusted Calculations verified by our financial advisors.
Reminders (via email or the app) for Important Tasks: 1040ES quarterly payments, worker’s comp and more.
Guidance: Get answers on critical topics like the child care tax credit, FSA plans, and more.
Expert Support: Send us an email from within the app’s ToolKit (email@example.com).
We are your Payroll Service Provider (PSP) and Reporting Agent (RAF), so we will stay on top of tax changes and be the mailing address for all the paperwork from your state and the IRS.
Q. How do I get started?
A. Please download the Nest Payroll app from the App Store onto your iPhone. After subscribing from within the app, you can generate a paycheck amount quickly after entering basic information about your employee and yourself. To generate a legal paystub (meeting IRS requirements), you will need to complete your profile, which includes authorizing us to obtain Federal and State Tax ID’s on your behalf.
Q. What states are covered?
A. Currently California. Please send us a message through the app or email us at firstname.lastname@example.org if you live in a different state and would like to use our service.
Q. Do you help me register and get my EIN with the government entities?
A. Yes, we’ll get you registered as a household employer with the IRS and your state, obtaining your federal and state employer identification numbers. You will be asked in your employer profile to authorize us to do so. If you already are registered as a household employer, please email the account numbers to us at email@example.com.
Q. Why do you need my social security number?
A. Your social security number is required to obtain the Federal EIN and the state EIN, which are both required to process your payroll taxes. It is also required for the year-end tax requirements and prep we will complete for you.
Q. How secure is my data?
A. We take security very seriously, and follow best industry practices. We also ask for the minimum amount of information that enables us to process your household payroll.
Your login user name and password is stored securely in a separate database using multi-layered hardware and software encryption. We safeguard access to the Nest Payroll app with your own 4-digit code, or you can enable Touch ID if you choose, so only you can view your detailed account from within the app.
Additionally, all your employer information, such as your name, SSN and banking information is in a secured "vault", which generates a unique encryption for each write and the previous encryption key is discarded.
Q. Do you file the state-required New Hire Report for me?
A. Yes, we will take care of this for you. We prepare the report on your behalf for each employee you hire and file it with the state before the deadline.
Q. Do you withhold income taxes?
A. Yes. We make it easy to withhold, and you can make the proper election for your employee in his or her settings under My Team, based on your employee’s W4 election. If you did not withhold, your employee could have an unplanned tax burden at the end of the year.
Q. Do you provide a W2 at the end of the year?
A. Yes, we prepare your employee's W-2 and distribute it to you for them in January. We will also file the required W2 reports with the Social Security Administration, so you don’t have to.
Q. When do I need to start paying a household employee legally?
A. Generally, if you plan to pay a household worker more than $2,100 (2018), then you are required to pay federal payroll taxes including social security and medicare. However, state requirements differ from Federal. For example, California requires you to withhold State Disability Insurance (SDI) once you pay $750 in a quarter, and after $1,000 you need to withhold SDI and pay Unemployment Insurance (UI) and Employment Training Tax (ETT) for the remainder of the current year and through the following year, even if wages fall below $1,000 in a quarter.
Q. Who is considered a household employee?
A. You have a household employee if you hired someone to do household work or take care of your children or dependents, and you control not only what work is done but also how it is done. For example, in the case of a nanny, the parents control the schedule, specify the food that the nanny feeds to the children and direct what activities the children undertake. The same criteria apply to caregivers, private nurses, house cleaners, housekeepers, gardeners, estate managers, personal chefs and personal assistants.
It doesn't matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. It also doesn't matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.
If the worker has an independent business (sole proprietorship, LLC, etc.), controls how the job is done, provides his or her own tools, and offers the same services to the general public, he or she is probably not your employee. See IRS guidelines here.
Q. Do I need to do an I-9 for my new employee?
A. Yes, every employee you have needs a completed I-9 on the first day of work. We will remind you to do this as soon as you add a new employee. You can access the form through the app and once you have your employee fill it out, you can take a photo of it and store it under your employee’s profile, or store the paper form in your files.
Q. How do I report taxes if I share my employee with another family?
A. If you share an employee with another family, both families are separate employers. Each family is responsible for withholding and paying payroll taxes on their share of the wages paid to the employee.
Q. How do I get a tax break on childcare or dependent care?
A. There are a couple ways to claim a tax break for care for a dependent.
1. Flexible Spending Accounts (FSA) or Dependent Care Assistance Program (DCAP) – Many companies provide this as a benefit to their employees and allow contributions up to $5000 of pre-tax earnings to a Dependent Care account. Employees would then be reimbursed these tax-free funds to cover child/dependent care expenses.The care must be for a child under age 13 or a disabled dependent meeting certain other requirements.
2. Child and Dependent Care Tax Credit – For folks who don’t have access to a Dependent Care Account through work, you can claim the Child and Dependent Care Tax Credit (Form 2441) on your personal income tax return at year-end. You can claim up to $3,000 of the un-reimbursed qualifying child care expenses paid in a year for one qualifying individual, or $6,000 for two or more qualifying individuals. The credit can be anywhere from 20% to 35% of your qualifying expenses.
If you have more than one qualifying dependent (2+ children or a child plus your dependent parent, for ex) and qualifying expenses in excess of $5,000, it may be possible to be reimbursed the maximum amount of $5,000 through the FSA and take a Dependent Care Tax Credit based on excess expenses up to $1,000.
Please refer to the IRS details here: https://www.irs.gov/pub/irs-pdf/p503.pdf
Please speak to your tax advisor on the best way to handle your specific situation.
Q. What if I have a question?
A. We would love to help you, so please get in touch. You can ask a question right within the app in the employer settings/customer support. We'll be happy to answer your questions and get back to you in a timely manner. Or email us at firstname.lastname@example.org.
Q. What if I already use a payroll service, but I would like to switch?
A. If you cancel your existing service provider, your employee should receive a W2 from them based on the payments during that time. It is your responsibility to make sure this happens with your past payroll provider. When you start with our service, your employee will receive a W2 from us at the end of the year for the payroll you generate with our service only. It’s fine for an employee to have more than one W2 from the same year.
Q. I need to pay a lot of back taxes and fix some payroll problems that I did incorrectly. Can you fix them for me?
A. We can help you pay your household employees moving forward, however we are unable to fix existing tax complications or handle retroactive payments going back more than three weeks. We would advise you to consult with a tax expert to get your situation corrected, and to use Nest Payroll now, moving forward.
Q. My employee will be gone for several weeks. What do I do with payroll?
A. Even if there’s no payroll to report, quarterly filings to the state are still required which Nest Payroll will submit on your behalf.
Q. My employee quit. What do I do about canceling payroll?
A. Please go to "Subscription" within your Profile, and click Suspend. You will be contacted by our support team at the phone number provided in your Employer Profile within one business day. We need to get in touch with you to ensure we handle all outstanding tax payments and filings correctly. You might need your employee's W2 and your Schedule H. If you plan to employ people to work in your home in the future, but do not have payroll this quarter, we will file for you as temporarily no wages to report. If you completely stop employing people to work in your home and do not intend to hire anyone in the future, you will need to have your California account closed. Please email us at anytime at email@example.com to let us know if you have questions.
Q. Can I deduct the service costs of Nest Payroll?
A. Yes. You will need to:
1. Itemize your deductions; and
2. The sum of your miscellaneous expenses (which also includes things like unreimbursed employee-related expenses, investment expenses, and safe deposit box fees) must exceed 2% of your Adjusted Gross Income (AGI).
You are only allowed to deduct the miscellaneous expenses above and beyond 2% of your AGI – not the full amount. Please speak to your tax advisor on the best way to handle your specific situation.
Q. Why do I need to authorize power of attorney to Nest Payroll?
A. California state law requires all payroll providers to obtain this authorization, which allows providers to:
electronically report, file, and enable payment of a household employer's taxes with the appropriate state agencies.
request and inspect a household employer’s confidential tax information, e.g., the proper state tax rates.
report new hires to the appropriate state labor departments.
Power of attorney does not authorize payroll providers to make legal decisions for the household employer.
Q. I already have an EIN and a CA state EDD number. Can I use those?
A. If your Federal EIN is for either a sole proprietor or a household employer, then please use the same number. Please email us this number at firstname.lastname@example.org.
If the Federal EIN is for a corporation, LLC, partnership, etc., then do NOT use that EIN. You will need a separate EIN as a household employer. We will get it for you.
Q. I already have a CA state EDD number. Can I use it?
Yes, if your California EDD number was set-up as a household employer. However, if it was for a commercial business or sole proprietor business, you’ll need to have a separate account number just for household.
Please email us your existing California EDD number setup as a household employer at email@example.com.
Q. What if I hire an employee but they earn less than $2,100 in wages?
A. If you have paid your household employee(s) less than the wage base, which is $2,100 for tax year 2018, all withheld federal taxes must be refunded to the employee and all wages removed from your W-2 forms before filing. State taxes could still apply. Please email us at firstname.lastname@example.org if you need assistance with this process or have any questions.