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Tax and Legal Issues Household Employers Should Address at the Time of Hire

By Tom Breedlove, HomePay by Breedlove

Because of the complexities in hiring private duty care, it’s easy for families to misstep if they don’t have adequate help from the start. In fact, many of the more common household employment payroll and tax mistakes can be avoided by addressing a few key items at the time of hire. So if you’re about to hire in-home care, keep these three things in mind as you’re discussing the details of the employment arrangement with your new employee:

    1. Go over the New York Wage Notice together. State law requires all employers to provide a Wage Notice to their employee at the time of hire and again by February 1st of each subsequent year of employment. But aside from complying with the law, the Wage Notice requires a myriad of information that will get both of you on the same page right away, including;

    1. Your name, address and phone number
    2. The employee’s hourly and overtime rates of pay
    3. The day of the week the employee will be paid and what they’ll be paid weekly

        2. Talk about your time off policy. Similar to the Wage Notice, the state of New York requires employers to give their employee written notice about their policy on sick leave, vacation, personal leave and holidays. After one year of employment, your employee is entitled to at least three paid days off. And if you live in New York City, you’re required to give your employee two days of paid sick time per year as well. These requirements are important to know – not only from a compliance standpoint, but also because many families overlook time off and are unprepared for when their employee asks for a vacation or calls in sick.

          3. Purchase workers’ compensation and disability insurance policies. If your employee will work 40 hours or more per week – or is a live-in employee – you must purchase a workers’ compensation and disability insurance policy. These two items are not handled through the tax and payroll process, but are very important because they provide financial assistance to your employee if s/he is unable to work due to injury or illness. Families caught without coverage can be held liable to pay their employee’s medical bills and lost wages and can be subject to large fines from the state. The most convenient solution for obtaining both a workers’ compensation and disability insurance policy is to contact the New York State Workers’ Compensation Board at (877) 632-4996.

            By addressing these three topics before your employee starts, you’ll avoid getting off on the wrong foot both with your employment relationship and your payroll and tax situation. Like any new endeavor, mistakes can happen, but if you spend the time to research what your requirements are and come up with a game plan that is easy to execute, household employment doesn’t have to be as complicated as many people make it out to be.


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            This entry was posted on Tuesday, September 2nd, 2014 and is filed under Elder Law | no comments | Leave a comment

            Changes In SSI Benefit Payments in New York

            By Amy C. O’Hara, Esq., Littman Krooks LLP

            New York State residents who receive Supplemental Security Income (SSI) also receive a state supplement.  For 2014, the maximum federal SSI amount is $721 and the NYS supplement is $87 bringing the maximum SSI benefit to $808 per month.  At this time, New York State residents receive these benefits in one payment from the Social Security Administration (SSA), usually direct deposited into the recipient’s bank account.  Starting October 1, 2014, New York SSI recipients will receive their federal SSI benefit and the state supplement benefit separately.  The reason for this change is because New York State will realize significant savings by administering the state supplement benefits directly instead of paying the SSA to administer this program on its behalf.

            The New York State Supplement Program, Bureau in the Center for Employment and Economic Supports within the NYS Office of Temporary and Disability Assistance (OTDA) will be responsible for administering this benefit. All business will be conducted by telephone, fax or mail only. There will not be walk-in offices to handle questions or requests. A customer support center with a toll free number will be available to assist recipients and is expected to be available starting August 2014.

            The only change NYS SSI recipients will notice is that they will receive two monthly payments instead of one.  NYS SSI recipients will receive their state supplement benefits in the same manner that they receive their SSI benefit. Direct deposits will go into the same account and payments will be issued on or before the first of each month.  Starting in August 2014, NYS SSI recipients should receive notice by the State Supplement Program Bureau of this change. If the recipient has a representative payee for SSI purposes, this payee will remain the same for the state supplement benefit.

            For more information please visit http://otda.ny.gov/programs/ssp/.

            This entry was posted on Monday, August 4th, 2014 and is filed under Elder Law | no comments | Leave a comment

            Why the Gross Wage vs Net Pay Discussion is Important for Private-Duty Care

            By Tom Breedlove, HomePay by Breedlove

            Families in need of a private-duty caregiver have a laundry list of items to account for during the hiring process. Most importantly is selecting the right candidate, but once that item is crossed off the list, it’s crucial to account for the expenses of hiring this new household employee.

            When you make a caregiver a compensation offer, it is critical that both of you are on the same page as to what the Gross Wages and Net Pay will be. For those in the professional world, this seems like a no-brainer, but it’s actually quite common for caregivers and families to confuse the two. Just to be clear, Gross Wages refers to the amount of money an employee earns prior to taxes being withheld and Net Pay is the amount the employee actually takes home.

            So just as in the professional world, if you’re hiring private-duty care, it’s paramount that the compensation offer is in gross wages. It’s impossible for you to know what your caregiver’s Net Pay should be before they accept your offer because you don’t know exactly how much in taxes to withhold until the appropriate paperwork is filled out.

            If you have already offered a Net Pay amount, feel free to use our Employee Paycheck Calculator to translate it into Gross Wages. Once the caregiver has filled out a Federal W-4 and a New York IT-2104, the calculator can determine their federal, state, and perhaps local income tax withholdings.

            This is extremely important for you to do since all compensation you pay your employee must be reported to the government in terms of Gross Wages. It’s also the figure that will be used to calculate your caregiver’s benefits and your taxes and tax breaks. For example, let’s say a family (who doesn’t live in Yonkers or New York City) offers a candidate $550 a week, but it’s Net Pay. The caregiver is Single with no children, so she fills out her W-4 as Single with 2 allowances and her IT-2014 as Single with 0 allowances. Using our Employee Paycheck Calculator, the family can easily make the adjustment from Net pay to Gross Wages as follows:

            Net Pay:                          $550.00
            Social Security Tax:      $43.48
            Medicare Tax:                $10.17
            Federal Income Tax:     $67.20
            State Income Tax:          $29.90
            State Disability Tax:      $0.60

            Gross Wages:                   $701.35

            This calculation takes seconds to process and immediately the caregiver can see what her gross wages are, what taxes are being withheld and how much she’ll take home. Additionally, the calculator will also show that the family will need to budget for an additional $62.58 in employer taxes each week, which means their budget for hiring the caregiver is really $763.93 each week.

            The main point to take away from looking at these numbers is that open communication is extremely important when discussing compensation with a caregiver. When both of you understand the true cost of hiring an employee and what taxes are involved with being an employee, conflicts are less likely to occur and the employment relationship starts off on the right foot.

            This entry was posted on Friday, July 25th, 2014 and is filed under Elder Law | no comments | Leave a comment

            LEARNet: Unique Approaches in Addressing the Needs of Students with Brain Injury

            Each year in the United States, more than 30,000 children become permanently disabled following a brain injury resulting from such incidents as falls, sports-related concussions, anoxia, stroke, and vehicular crashes. As a child gets older, that part of the brain previously damaged may not work as well as it should. Problems seen in children after brain injury include deficits or altered development in attention and concentration, memory, and organizational skills as well as changes in behavioral, social, and emotional functioning. The consequences may present significant challenges for parents and educators of children with brain injury who struggle to meet their unique needs. There are a variety of approaches that provide information about brain injury to educators and families, although resources for these support systems are extremely limited.

            The Brain Injury Association of New York State is pleased to announce the implementation of Project LEARN: Living Education and Resources Network and LEARNet. Recognized by the Brain Injury Association of America’s State Award of Excellence in 2007, Project LEARN’s primary objective is to create and sustain competency for those supporting children with brain injury at home and at school by establishing an easily accessible, interactive, user-friendly web-based information and resource program.

            LEARNet is designed to provide information and support to educators and parents of a student with brain injury. LEARNet provides a step by step, common-sense approach in determining the factors that contribute to specific problems that students with brain injury often experience. It then instructs users on effective intervention strategies illustrated by video demonstrations. The format and content of the site reflects input gathered across the state from families, students, educators, and experts in the field.

            Resources provided on the LEARNet website include an extensive listing of literature, media resources, books, other helpful websites, and links to state and local programs; a comprehensive glossary of terms related to brain injury; information about the brain, how it works, and what happens when it is injured; and support materials, including short articles on a wide range of topics relating to life after brain injury.

            Project LEARN and LEARNet offer a unique approach in addressing the needs of students with brain injury and the educators and parents who strive to meet them effectively. The projects provide invaluable information to help develop appropriate educational plans using proven interventions. As a result, frustration and exacerbation of problematic behaviors are minimized.

            Developed and supported by BIANYS staff and a team of nationally recognized experts in the field of pediatric brain injury, LEARNet is available to the general public and state affiliates free of charge, by visiting http://www.projectlearnet.org/.User suggestions are welcome and encouraged; LEARNet continues to evolve in response to its audience.

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            This entry was posted on Tuesday, July 15th, 2014 and is filed under Special Needs Planning | no comments | Leave a comment

            Millennials and Retirement

            There is an unfortunate paradox in retirement planning: the best time to start saving is when people are least likely to do so: when they are young.

            It is not hard to convince people in their 40s and 50s that saving for retirement is important, but saving at that point is so much more effective if one already has a head start from beginning to save in one’s 20s and 30s. The difficulty is that young people have trouble picturing themselves at retirement age, so, by and large, they do not start planning for it.

            Behavioral economists call this the “tangibility gap.” For young people, the concerns of today outweigh the concerns of their older, future selves. Unfortunately, that makes it difficult to catch up later.

            Fortunately, there is an easy saving tool that many young working people have access to, and it has incentives to save built in. That, of course, is a 401(k) retirement savings account.

            A 401(k) is set up to make saving simple. Money in hand is easy to spend, but money that goes straight to a retirement savings account is easy to save. And in the case of an employer-matched 401(k), choosing not to participate means turning down free money, something no one wants to do. Plans vary, but typically an employer will either fully match, or contribute 50 cents on the dollar, for anywhere from 1 percent to 6 percent of employees’ pay contributed to the 401(k). The fact that the contributions are made pre-tax means there is more money to grow through investment, and withdrawals are often taxed at a lower rate in retirement, when one may be in a lower tax bracket.

            Truth be told, there are many young workers who do not take advantage of even employer-matched 401(k)s, and that is a mistake. Young people who do start building their 401(k)s will find it much easier to fund a comfortable retirement when the time comes.

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            This entry was posted on Thursday, June 26th, 2014 and is filed under Estate Planning | no comments | Leave a comment

            Tax Law 101 for Families with Private-Duty Care Needs

            By Tom Breedlove, Director, Care.com HomePay, Provided by Breedlove

            When a family hires an individual to perform duties in or around their home, they are considered a household employer. The IRS views the worker — whether a nanny, senior caregiver, health aide, etc. — as an employee of the family for whom she works. For most families, having household payroll and tax responsibilities is akin to learning a new language and most have no clue where to go for guidance. So to help simply this process, here are five quick tips you need to know about household employment before your hire.

            #1: Tax responsibilities kick in at $1,900

            If a household employee is paid $1,900 or more in a calendar year, the employer is required to withhold and remit payroll taxes to the state and the IRS. If the employer pays less than $1,900, they are still legally obligated to adhere to federal and state labor laws even though no employment tax filings are required.

            #2: Household employers must withhold taxes from their employee’s paycheck each pay period

            Specifically, 6.2% of gross wages should be deducted for Social Security taxes and 1.45% for Medicare taxes. By law, these taxes (collectively known as “FICA”) must be withheld from the employee’s pay – or else the employer is responsible for them. The employee’s federal and state income taxes are NOT required by law to be withheld, but it is a good idea for the employer to do so. Otherwise, the employee may have a large tax bill due at the end of the year and may be subject to underpayment penalties.

            #3: Household employers are required to pay federal and state employer taxes

            Just like the employee’s withholdings, employers must pay a 6.2% Social Security tax and a 1.45% Medicare tax on top of the gross wage they pay their employee. It’s sometimes called the “employer match” of the FICA taxes. Additionally, household employers are responsible for paying federal and state unemployment taxes. These taxes must be reported and remitted along with the withheld employee taxes throughout the year.

            #4: Additional paperwork is required at year-end

            By the end of January, household employers should provide a Form W-2 to their employee. They should also file Form W-2 Copy A and Form W-3 with the Social Security Administration and attach Schedule H to their federal income tax return.

            #5: Employers must meet federal and state labor law requirements

            Household employees are classified as non-exempt workers. As such, they must be paid at least minimum wage for every hour they work and be paid overtime for all hours over 40 in a 7-day workweek. The rate for overtime pay must be at least 1.5 times the regular rate of pay. (Note: Live-in employees in New York must be paid overtime once they reach 44 hours in a week). In addition, most families in New York are required to carry a Workers’ Compensation and Disability insurance policy (policies can be procured through the New York State Insurance Fund). Following the Domestic Worker Bill of Rights in New York passage in 2010, household employees are entitled to 3 days of paid vacation and 2 days of paid sick leave after one year of service.  Finally, employers in New York must provide a written wage notice (or employment agreement) each year by February 1 as well as detailed paystubs illustrating hours worked, total wages and all tax withholdings.

            If you have any questions, please consult IRS Publication 926 or feel free to call us at 1-888-273-3356.


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            This entry was posted on Wednesday, June 18th, 2014 and is filed under Estate Planning, Tax Planning | no comments | Leave a comment

            Important Change Made in Medicare Payments for Skilled Care

            An important change has taken place in Medicare payments for certain types of skilled care, such as physical therapy. Thanks to the terms of a settlement in a class-action lawsuit, no longer will Medicare payments be discontinued because a patient’s condition has stopped improving. This is a significant benefit for many patients whose conditions may not be improving, but who need skilled care to keep their conditions from deteriorating. However, the change was made quietly, without informing Medicare beneficiaries, so many people are not aware of the new rules.

            The change affects many Medicare beneficiaries with chronic diseases such as Alzheimer’s, Parkinson’s and multiple sclerosis. The requirement that patients show improvement has been removed from Medicare’s policy manual, meaning that Medicare will cover skilled care from physical, speech and occupational therapists, as well as nursing home care and home health care, for patients who need such care to prevent their conditions from deteriorating.

            The new rules may be most beneficial to seniors who want to maintain their independence for as long as possible. If seniors are able to get skilled care for chronic conditions while they are living at home, they may be able to avoid the need for institutional care.

            Of course, Medicare still has eligibility requirements. Treatment must be ordered by a doctor, and there is a $1,920 annual cap on physical and speech therapy provided in a nursing home or outpatient facility. However, exceptions to the cap are available if a doctor certifies that the treatment is medically necessary. There is another, separate cap on occupational therapy costs, with the same limits and exceptions. In the case of home health care, the caps do not apply if a patient is “homebound,” which means that leaving home requires considerable effort and cannot be done without the help of another person or an assistive device.

            The terms of the settlement also require that Medicare perform a review of claims from the past three years that were denied because patients were not improving. Patients who paid for such care themselves can request reimbursement. For claims with a final denial dating from Jan. 18, 2011 to Jan. 24, 2013, the deadline to request reimbursement is July 23, 2014. For claims with a final denial dating from Jan. 25, 2013 to Jan. 23, 2014, the deadline is Jan. 23, 2015.

            After Jan. 23, 2014, Medicare should not deny claims solely for the reason that a patient’s condition is not improving or has plateaued. If medical providers suggest that care will not be covered for that reason, they should be directed to the Centers for Medicare and Medicaid Services website, which has a fact sheet outlining the terms of the settlement.

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            This entry was posted on Monday, May 19th, 2014 and is filed under Elder Law | no comments | Leave a comment

            Major League Baseball Supports Autism Awareness

            Major League Baseball is hosting a number of events in the coming months to support autism awareness.

            The New York Yankees are offering half-price tickets to members of the Autism Speaks community for their Saturday, August 9 home game against the Cleveland Indians. The offer is valid for select general, non-premium seating areas. Fans may purchase these tickets at a half-price savings from the regular advance ticket price. The discount is on a first-come, first-serve basis and is only available online at http://newyork.yankees.mlb.com/ticketing, using the “autism” offer code. You may call (212) YANKEES with any questions. The offer expires August 8, 2014.

            You can find information about other teams that are supporting autism awareness by visiting http://mlb.mlb.com/mlb/tickets/autism_awareness.jsp

            Autism Speaks is a leading autism advocacy and research organization, committed to funding research into causes, treatment and a cure for autism, raising awareness about autism spectrum disorders, and advocating for people with autism.

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            This entry was posted on Wednesday, May 7th, 2014 and is filed under Elder Law | no comments | Leave a comment

            How Annuities Work

            Annuities are an investment tool that investors use to help plan for retirement. Before deciding whether to make an annuity contract part of your financial plan, it is important to understand how annuities work and what potential pitfalls you need to watch out for.

            Annuity contracts are usually made between an investor and a life insurance company. The individual pays a single premium or series of payments at the outset in exchange for a guaranteed distribution or a payout stream determined by the performance of the annuity and underlying investments. An investor can opt to receive payments for a period of time or for the rest of their life. Annuities usually provide tax-deferred earnings growth, and when withdrawals are made, the gains are taxed as ordinary income, not capital gains. Annuities may include a specified minimum death benefit to one’s beneficiary. Early withdrawals may bring tax penalties and surrender charges from the insurance company.

            Annuities are generally of three types: fixed, indexed and variable. With a fixed annuity, the insurer promises to pay a specified amount based on the amount in one’s account, and a specified interest rate. The return on an indexed annuity is based on the performance of a stock price index, with a set minimum performance, while a variable annuity allows the investor to choose different options such as mutual funds, with payments based on the performance of those funds.

            If you are considering purchasing an annuity product, make sure that you understand the expenses and fees involved. If a high rate of interest is offered, make sure you know whether that is an initial rate intended to make the investment more attractive, which will later drop to a lower rate. And be aware that brokers or agents may push annuities to earn a high commission. High-pressure sales tactics can be a sign that the financial product is a better deal for the seller than for the investor.

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            This entry was posted on Wednesday, April 30th, 2014 and is filed under Estate Planning, Tax Planning | no comments | Leave a comment

            Guest Blog: Too Well for Rehab, Not Well Enough for Home

            Our Guest Blogger this week is Susan Yubas, a Certified Senior Advisor (CSA)® and the Founder of  FYI Senior Living Solutions. With over thirty years of health care management experience, she is able to assist seniors and their families in navigating the housing, social, financial and healthcare complexities related to aging.  She is knowledgeable in the regulatory and functional requirements of senior housing, and has provided strategic planning and development services to health care providers across a continuum of care.


            Despite our hopes, being discharged from rehab to home is sometimes complicated and inappropriate.

            A family member recently had an extended hospital stay followed by a few weeks in a rehabilitation facility for therapy to regain physical strength.  He only longed to go home and sleep in his own bed in his own home.  We all know how wonderful that would eventually be, but being discharged from rehab to home is sometimes complicated and inappropriate.

            A hospital stay can be disorienting for the best of us, but more so for older adults, making the transition to home more difficult.  Some of the potential issues include:

            Managing their medications when the previously known medication regimen has changed from what they recall it was before they went into the hospital

            Their ability to get around on their own might have changed and they forget that they cannot get out of bed, up from a chair without assistance or are unsteady on their feet , leading to an increased risk of falling

            Meal preparation may be overwhelming so they may not eat a well- balanced nutritious diet, or they may not eat at all.

            Depending upon the person’s condition, assistance may be needed in monitoring their health in the initial weeks and months following discharge.  Early identification of symptoms that may indicate that they are not fully recovered or that there is a decline in their health is critical.  Sometimes, this is accomplished successfully by friends and relatives or by the hiring of a private home health aide.

            Since our family member had children who work and were not around during the day; he did not want someone to live in his home with him; it was difficult for him to get out and about on his own and since his friends had traveled to warmer climates for the Winter months, he chose to take an interim step that may become more permanent:  with encouragement from his family, he moved into an assisted living community for the time being until they could all agree it was safe to move back home.

            The benefits have been terrific and he is thriving – he is dressed and out of bed each morning and eating well.  He has found new friends to play cards with, and discuss politics and world events.  At the same time, he has the comfort of his own apartment within the assisted living community to go to when he wants his private time.

            After dinner at his daughter’s house, he announced that it was “time to go home.”  She said “Dad, you mean to your apartment?”  “Yes,” he replied.  ”My new one.”

            The definition of home has changed.

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            This entry was posted on Friday, April 25th, 2014 and is filed under Elder Law | no comments | Leave a comment