Substitute and Taxes

[ATK]

One of my daughters friends MOM down the street said she could sub for me if I:

1) needed to pick a big kid up from school sick and run to doctor (only couple hours)
2) My youngest was sick and needed to go to doctor and be away from the kiddos (6-8 hours)
3) I was sick (6-8 hours)
4) had to make an appointment in daycare hours like cavity filling (couple hours)

So my question is do you claim them on taxes as an expense and then they have to?

ALSO I dont have liability ins but im looking into it through Markel, would I have to add them?

[TomCopeland]

employee

One of my daughters friends MOM down the street said she could sub for me if I:

1) needed to pick a big kid up from school sick and run to doctor (only couple hours)
2) My youngest was sick and needed to go to doctor and be away from the kiddos (6-8 hours)
3) I was sick (6-8 hours)
4) had to make an appointment in daycare hours like cavity filling (couple hours)

So my question is do you claim them on taxes as an expense and then they have to?

ALSO I dont have liability ins but im looking into it through Markel, would I have to add them?

You must treat this person as your employee and withhold Social Security/Medicare taxes, pay state and perhaps federal unemployment taxes, and perhaps get workers compensation insurance. Your business liability insurance policy through Markel should also cover your employee.

[ATK]

Thanks Tom!

So if she makes less than $600 does SHE then claim it on her taxes or only if above that?

I guess I am confused. My parents pay ahead of service so if family A,B,C each give me a check Friday for $200 for the next week M-F. I automatically set aside 20% of that for my own taxes so I'm left with $480 ($96 a day). Say Tuesday my youngest is sick and I need her to cover 7 hours that day ($70). I now have $26 left for that day. Do I save this for her part of the taxes or do I withhold from her $70?

And where do you figure out the withholdings etc?

Thanks!

[TomCopeland]

employees

Thanks Tom!

So if she makes less than $600 does SHE then claim it on her taxes or only if above that?

I guess I am confused. My parents pay ahead of service so if family A,B,C each give me a check Friday for $200 for the next week M-F. I automatically set aside 20% of that for my own taxes so I'm left with $480 ($96 a day). Say Tuesday my youngest is sick and I need her to cover 7 hours that day ($70). I now have $26 left for that day. Do I save this for her part of the taxes or do I withhold from her $70?

And where do you figure out the withholdings etc?

Thanks!

When you hire someone to help you care for children, it doesn't matter how little you pay them. The $600 you refer to has to do when you hire an independent contractor - then you don't have to issue a Form 1099 Misc if you pay the person less than $600. But, any money you pay an employee is subject to withholding taxes and the employee must report it as income, no matter how little money is involved. You do the withholding on the amount you pay your employee. The amount you pay your employee is deductible to you as a business expense. Therefore, you only need to set aside money for your own taxes on your profit (after all your expenses, including employee wages).

Here's more details: http://www.tomcopelandblog.com/2011/...-employee.html

[ATK]

Thanks so much for the link! Just so I understand 100%

You must fill out Form I-9 (Employment Eligibility Verification) to verify that your employee is eligible to work in the U.S. You don't file this form with the IRS; instead keep it in your files.- So I fill this out and I DONT send it in to the IRS I just keep it on me incase

You must have your employee fill out IRS Form W-4 (Employee's Withholding Allowance Certificate) to determine how much you must withhold in federal income taxes from the employee's pay. You don't file this form with the IRS; instead use it with IRS Publication 15 (Circular E) Employer's Tax Guide to look up how much to withhold- I understand this and she would be married not head of household (I believe her husband claims kids on taxes) so Id assume she would be a 0 on withholdings. BUT since this is so random I may use her one day one month and then skip a month and the next use her 2 days in a month. Do I look at the monthly, daily, or weekly charts? Most of them say she would have $0 withholdings to maybe $3.

You must withhold Social Security and Medicare taxes from your employee's paycheck. As an employer you must withhold 7.65% out of the employee's pay. In addition, you must contribute an another 7.65% of the employee's pay out of your pocket. For example, if your employee earns $100 in a week, you must withhold $7.65 and pay in another $7.65 (total: $15.30). If you pay less than $4,000 in wages for the year, file the annual IRS Form 944 (Employer's Annual Federal Tax Return). If you pay more than $4,000 file the quarterly IRS Form 941 (Employer's Quarterly Federal Tax Return)- So in this if she makes $70 one day that means I withhold $5.35 from her payment she receives from me AND then I save an additional $5.35 that I set aside from anything else I profited that day? Also I will FOR SURE be paying her less than $4,000 a year. Does this form just get filed with my taxes that my tax person would do?

If you pay an employee $1,500 or more in any calendar quarter or had any employee work for you in 20 different weeks during the year, you must pay federal unemployment taxes (FUTA). The tax is 0.6% of your employee's pay and comes out of your pocket. File the annual IRS Form 940 (Employer's Annual Federal Unemployment Tax Return).- If she makes less than $1,500 do I not need to worry about this part?


Im having a hard time find Virginia documents for state witholding

[TomCopeland]

employees

Thanks so much for the link! Just so I understand 100%

You must fill out Form I-9 (Employment Eligibility Verification) to verify that your employee is eligible to work in the U.S. You don't file this form with the IRS; instead keep it in your files.- So I fill this out and I DONT send it in to the IRS I just keep it on me incase

Yes

You must have your employee fill out IRS Form W-4 (Employee's Withholding Allowance Certificate) to determine how much you must withhold in federal income taxes from the employee's pay. You don't file this form with the IRS; instead use it with IRS Publication 15 (Circular E) Employer's Tax Guide to look up how much to withhold- I understand this and she would be married not head of household (I believe her husband claims kids on taxes) so Id assume she would be a 0 on withholdings. BUT since this is so random I may use her one day one month and then skip a month and the next use her 2 days in a month. Do I look at the monthly, daily, or weekly charts? Most of them say she would have $0 withholdings to maybe $3.

Look at the monthly chart. Yes, the withholding can be very low.

You must withhold Social Security and Medicare taxes from your employee's paycheck. As an employer you must withhold 7.65% out of the employee's pay. In addition, you must contribute an another 7.65% of the employee's pay out of your pocket. For example, if your employee earns $100 in a week, you must withhold $7.65 and pay in another $7.65 (total: $15.30). If you pay less than $4,000 in wages for the year, file the annual IRS Form 944 (Employer's Annual Federal Tax Return). If you pay more than $4,000 file the quarterly IRS Form 941 (Employer's Quarterly Federal Tax Return)- So in this if she makes $70 one day that means I withhold $5.35 from her payment she receives from me AND then I save an additional $5.35 that I set aside from anything else I profited that day? Also I will FOR SURE be paying her less than $4,000 a year. Does this form just get filed with my taxes that my tax person would do?

You only withhold taxes on the days you pay her. In your example, you are correct on how much to withhold and pay. Since you will pay her less than $4,000 in a year, you don't need to send the money to the IRS until the end of the year with Form 944. By the way, I got the IRS to create this annual form, to avoid having to file quarterly for small employers.

If you pay an employee $1,500 or more in any calendar quarter or had any employee work for you in 20 different weeks during the year, you must pay federal unemployment taxes (FUTA). The tax is 0.6% of your employee's pay and comes out of your pocket. File the annual IRS Form 940 (Employer's Annual Federal Unemployment Tax Return).- If she makes less than $1,500 do I not need to worry about this part?

Correct, as long as she also worked fewer that 20 weeks.


Im having a hard time find Virginia documents for state witholding

Contact your state department of revenue.

[Unregistered]

What if you have a sub that you don't pay at all?

Do I still treat someone who is a volunteer like an employee and all the same rules apply, like paying Social Security for them etc.?

Thanks!

[TomCopeland]

volunteer

Do I still treat someone who is a volunteer like an employee and all the same rules apply, like paying Social Security for them etc.?

Thanks!

If you pay someone to help you care for children, or if you give them "gifts" in exchange for their work, then you must withhold Social Security/Medicare taxes, regardless of whether you call them a volunteer or employee. You may also need to pay federal and state unemployment taxes and get workers compensation insurance.