Legal Case Archive
How to learn legal lessons the easy (and inexpensive) way!
We have created an ongoing series of legal case studies that involve little-known tax law and/or labor law and highlight the importance of education and simple protection policies.
For placement agencies that place temporary nannies, the case below dramatizes why it's so important to classify them correctly.
Misclassifying Temporary Nannies -- The State of Oregon vs. A Nanny Placement Agency
If families have their own business, they may accidentally make a major mistake if they pay a household employee from their business finances.
Nanny vs. Family Business -- The IRS Requires That Personal Employees Be Paid Out of Personal Finances
Trying to maneuver and manipulate the tax calculation process to fit a salary negotiated on a net basis is usually a formula for disaster.
Nanny vs. Family vs. Business -- Negotiating Salary Based on Net Wages vs. Gross Wages
Placing a nanny who works over 40 hours a week is common. Protect your agency from an overtime lawsuit just like Annie's Nannies did.
Nanny vs. Family and Family vs. Annie's Nannies -- Preventing a Lawsuit with Overtime Documentation
Medical bills and lost wages can be devastating when an employee is hurt on the job. Workers' Compensation is required in a majority of states and protects candidates and clients while adding value to your service.
Injury on the Job -- Workers' Compensation to the Rescue
Providing your agency Federal Employer Identification Number (FEIN) to a client is unnecessary and risky.
Protect your FEIN. -- Protect your Agency.
Personal tax accountants are experts in many areas of tax law, but the highly-specialized world of household employment --with its unique requirements and numerous exemptions, exceptions and nuances -- falls outside of the expertise of most accountants. This case illustrates how a highly-acclaimed accounting firm unwittingly messed up the nanny tax process and ultimately cost the family a lot of money.
Using the Right Specialist -- Many families wrongly assume that all accountants are experts in household employment tax law.
When families and caregivers agree to have wages paid "under the table," they often do so with a false sense of security.
Virginia vs. Family -- Evading Household Employment Taxes.
Not many people understand taxes. This month we highlight a case that provides some basic information about income taxes that we all should know.
Nanny vs. Family -- Income Tax Payment on April 15th.
Having just returned from the International Nanny Association (INA) conference, we'd like to share the latest news and hottest topics being discussed and debated.
Knowledge Is Power -- INA Conference Review.
Health Insurance is an important benefit that every household employee would like. Thanks to tax breaks for both the employer and the employee, it's more affordable than most people think.
Tax Breaks for Health Insurance -- How Everyone Benefits.
Why is an agreement based on net wages problematic? There is no provision in payroll and tax law for compensation that is negotiated on a net (after tax) wage.
Family vs. Nanny -- How a Match Made in Heaven went to Hell in a Handbasket.
Placement Agencies play a valuable role in preventing expensive tax and labor law problems for their families. Our new partnership program makes this education effort quick, simple, systematic and painless.
A fairly common myth exists: it is acceptable to report some of an employee's wages "on the books." The rationalization is that both family and employee save some tax dollars and the nanny receives some of her benefits. This case illustrates the risk for clients, candidates and agency.
Reporting Partial Wages: State of California & IRS vs. Family and Nanny
A family legally set up a full-time nanny - with all appropriate taxes withheld and remitted. However, the family used the service of a "sitter" who watched their children on nights and weekends as needed. The "sitter" was below all tax withholding thresholds, but the family did not report her wages or pay any unemployment taxes.
Unreported and Unpaid Unemployment Tax: State of Massachusetts vs. Family
This edition of The Legal Review will discuss a common error made by families when hiring temporary care that's embarrassing politicians left and right these days.
Successful businesses create a loyal clientele who love the service so much they tell all their friends. This month we'll highlight how an agency created tremendous value - and referrals- by using a little hustle and knowledge.
Structuring Employement Agreements to Optimize Savings for Families and Employees
A family hired a life-long nanny who was nearing the age of retirement and wanted to be paid legally. The family was happy to pay legally, but unfortunately their in-house accountant was not an expert in household employment tax law. This month we highlight the common mistake of putting an employee on a company's payroll and how that mistake affectes a nanny's retirement.
As you may already be aware, the International Nanny Association (INA) has spearheaded an extensive lobbing effort to amend the Child and Dependent Care Tax Credit. Since we're the numbers people, we've dedicated this month's Legal Review to helping everyone understand the potential financial impact of this legislation.
Pending Legislative Changes to the Child and Dependent Care Tax Credit
A family had full intention of paying a nanny legally so she could get the professional benefits she deserves. Unfortunately, despite good intentions and efforts, they failed to meet the tax filing deadlines which ultimately resulted in a lien being placed on their home.
Washington, D.C. Department of Employment Services v. Family
With the intention to pay their nanny legally, a family handled their own household employment payroll and taxes. They made a good faith effort to manage the process and comply with all laws and regulations, but experienced an unfortuante pitfall due to the reporting nuances of household employment taxes.
Anxiety over the tax cost associated with paying their nanny legally caused a family to make the difficult decision of paying "off the books." Unfortunately, the family did not know that paying their nanny legally would entitle them to tax breaks that would ultimately save them money.
A first-time household employer complied with all federal and state reporting requirements for their nanny. The relationship ended amicably and the employee moved on to another position. Unfortunately an innocent lapse in communication caused significant headaches and hassles for the nanny.
Despite the warning from their placement agency, a well-intended family added their household employee to their business payroll. The mistake ended up bringing severe financial repercussions upon the family.
