B.A. Harris Blog

Are You Subject to the Household Services (Nanny) Tax?

If you pay an individual more than $2,000 in a calendar year for household services such as childcare/nanny services, you are considered a household employer. As such you are responsible for the reporting and payment of payroll taxes on your household employee(s). This includes filing quarterly state unemployment reports with the Idaho Department of Labor (and quarterly payment of state unemployment tax along with the filing), annual forms 910 and 967 with the Idaho State Tax Commission and annual forms W-3 and W-2 with the Social Security Administration.


Affordable Care Act and Health Reimbursement Arrangements

The Affordable Care Act (ACA) added new requirements for health insurance coverage.  Although small employers (those with fewer than 50 full-time employees) are not required to provide health insurance coverage, there are still some rules that come into play. Health Reimbursement Arrangements (HRA) that are not integrated with an employer group health plan are not permissible under the ACA unless the HRA applies only to excepted benefits or it caters solely to retirees.


Substantiation of Business Expenses

For certain business expenses, taxpayers are required to provide specific information substantiating the expense in order to deduct.  These four common expenses require specific detail: Travel expenses, including meals and lodging. Entertainment expenses. Business gifts (limited to $25) Property that lends itself to personal use such as automobiles and property used for entertainment or recreation. The taxpayer is required to substantiate by "adequate records or by sufficient evidence corroborating the taxpayer's own statement"


Estate Taxes, Portability, and Planning for All Married Couples

One of the many provisions made permanent by the American Taxpayer Relief Act on January 1, 2013 was a $5 million exclusion (adjusted annually for inflation) for estates of decedents dying after December 31, 2012. This is great news as otherwise it would have reverted back to a $1 million exclusion. Along with the higher exemption, another permanent provision is “portability” between spouses. Portability refers to the ability to allow the surviving spouse to apply the unused portion of the deceased spouse’s $5 million exclusion in addition to the applicable $5 million exclusion available to the surviving spouse .


Vacation Rentals Beware

If you have a second home, maybe in McCall or Sun Valley, and occasionally rent it out on weekends, odds are you have a sales tax liability that you have not been complying with. According to Idaho statutes a vacation rental is really no different from a hotel. Any rental for which the rental period is less than 30 days is subject to sales tax (6%), tourism and convention tax (2%), and quite possibly local taxes.

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