The coronavirus COVID-19 outbreak has resulted in an unsettling time for us all. As the pandemic continues, we want to assure you that NannyChex is operating normally. We are monitoring the outbreak and following the guidance of the Centers for Disease Control and Prevention (CDC) and state/local health agencies. We have implemented guidelines to keep our employees safe and mitigate current health risks. As an essential service, we will continue to process paychecks normally and file payroll taxes promptly. We are maintaining our normal business hours and continuing our exceptional client responsiveness by both phone and email.
We wish you and your loved one’s safety and good health.
We’re here to help!
If you have furloughed or laid off your employee or are considering this action or if you are interested in the options that are available for employers, please call us at 877-626-6924 or email firstname.lastname@example.org. Unfortunately, there is not a “one size fits all” solution for employers or employees who are impacted by COVID-19, but we are here to help you make an informed decision based on your individual circumstances.
Keep reading for an overview of the options that may be available:
Household employees who have had their hours reduced or who have been furloughed or laid off may be eligible for unemployment benefits. The unemployment program is funded by state and federal unemployment taxes which are paid by the employer (with additional employee taxes in some states) while the employee is working.
Each employee must apply for unemployment benefits through the state. Each state has its own requirements for eligibility, but generally, an individual must have been recently employed and earned a minimum amount of wages and/or worked for a minimum amount of time. The application process and computation of benefits vary by state, but generally, unemployment insurance temporarily replaces a portion of lost wages for up to 26 weeks although the American Rescue Plan provides up to 53 weeks of unemployment insurance to individuals who have exhausted state unemployment benefits. Eligible individuals whose hours were reduced or who lost employment through no fault of their own (ie they were not terminated for cause) generally qualify for benefits.
Each state continues to update their website with information on their unemployment process and useful information for employers, employees, and unemployment applicants. Please contact NannyChex if you are unable to locate your state’s unemployment website or see below. The federal government also provides some information on the CARES Act and unemployment during COVID-19:
American Rescue Plan
The American Rescue Plan is a plan that aims to provide sweeping relief to Americans impacted by COVID-19. The plan includes a variety of stimulus payments and tax credit expansions including providing benefits to household employers and their employees.
For families who contribute to a Dependent Care Flexible Spending Account (FSA), the contribution limit for 2021 has increased from $5000 to $10,500 per household. Many businesses offer their employees an FSA account as part of their company benefits plan. This program allows employees to contribute pre-tax money to a dependent care FSA and then get reimbursed for qualified expenses like wages paid to a nanny up to the amount contributed. For those who utilize this program, the tax benefit will vary based on each individual’s income, location, and amount contributed to the FSA account, but individuals can calculate their tax rate on their income and know that they will lower their taxable income by that rate for all dollars contributed.
The Child and Dependent Care Tax Credit have also been expanded. In previous years, families received a 20 percent credit on child and dependent care expenses of $3000 for families with 1 child/dependent and $6000 for families with 2 or more children/dependents. For 2021, these limits have increased to $8000 for families with 1 child/dependent and $16000 for families with 2 or more children/dependents. With the increased limits, many families who previously received a tax credit of $600 with 1 child/dependent or $1200 with 2 or more children/dependents will now receive a tax credit of $1600 with 1 child/dependent and $3200 for two or more children/dependents. The amount of credit will vary based on each individual’s income, and there is a gradual decrease of tax credit as income increases.
Covid Paid Sick and Family Leave
The American Rescue Plan extends COVID-related sick pay and family leave through September 30, 2021. Families can provide paid leave to their household employees for qualifying reasons related to the pandemic including being diagnosed with COVID-19, awaiting COVID-19 test results, taking time to get the COVID-19 vaccine, or recovering from the vaccine’s side effects.
Paid Sick and Family Leave Tax Credits
Household employers are entitled to a tax credit equal to the sick leave and/or family medical leave wages paid to an employee while out of work due to qualifying reasons related to COVID-19.
Employers who pay COVID-19 leave should also assemble the following documentation from their employees (this information is not sent to the IRS or NannyChex, but should be retained for their records):
-The employee’s name
-The dates for which leave is requested
-A statement of the COVID-19 related reason(s) the employee is requesting leave and written support for such reason; and
-A statement that the employee is unable to work, including by means of telework, for such reason
The federal government continues to update information on the FFCRA including its application for household employers, for more information on the FFCRA, please see below: