Caring Enough
August 2017
by Theodora Malison

Summertime brings about a change sweeping over our area in more than just warmer temperatures and surrounding foliage. For most, this season in particular, brings about a shift in scheduling for families and children, from the time school is dismissed to the time its hallways reopen. This seasonal change also happens to bring about a significant influx in hiring caregivers, babysitters and nannies during this time of recess.

Created by Founder, Chairwoman and CEO Sheila Lirio Marcelo, officially launched to families and caregivers in 2007, and continues to be the world’s largest online marketplace for families to find caregivers and in return, for caregivers to find meaningful jobs. With 24 million members spanning across 20 countries and new jobs posted every 30 seconds, it’s no surprise has sustained its place on the leader board among families and caregivers. In 2012, acquired Breedlove & Associates (now known as HomePay), the leader in household payroll and tax compliance— which is a critical step in not only helping families abide by tax and labor laws, but to also professionalize caregiving.

Suburban Life/Philadelphia Life spoke with Vice President of HomePay Operations, Kerri Swope, to learn more about HomePay and the benefits reaped by both families and caregivers by paying above board.

What exactly is HomePay?
It’s a family-friendly professional service which handles all aspects of payroll, tax and human resources compliance for families who have caregivers working in their home. What we do is help those families pay that caregiver legally on the books. HomePay also minimizes the risk for the family, by making sure the family is compliant with the laws and regulations of having a caregiver work for them in their home.

Why is HomePay recommended or more importantly, needed?
Whether a family is hiring a full-time nanny, a part-time babysitter, a housekeeper, or even a dog walker, if they’re paying that caregiver more than $2,000 in a calendar year, the IRS considers them a household employer. That brings with it certain tax obligations for the families which are complicated. The reality is that paying nanny taxes isn’t optional—it’s the law. It can be costly to a family if they’re found to be non-compliant and, while being paid under the table may seem like a ‘win’ for the caregiver, she’s actually missing out on access to critical benefits. Also, when families avail themselves of the tax breaks available, paying above board is usually more affordable than families realize. HomePay helps families manage the full process of payroll and taxes for our clients, insuring they maximize tax credits, stay compliant and afford employee access to benefits.

What are the tax breaks families using HomePay are eligible for?
There are two types of tax breaks families can leverage to reduce costs:

• The Dependent Care Account: This is commonly known as a Flexible Spending Account (FSA). Most businesses allow their employees to contribute up to $5,000 of their wages (pre-tax earnings) to an FSA to help pay for childcare expenses.
• The Child and Dependent Care Tax Credit: Families can take advantage of this when they file their personal income tax return at the end of the year. For one dependent, this tax credit can save a family roughly $600 annually; for two or more dependents, the savings can total $1,200 annually.
And if you have two or more dependents, you can take advantage of both of these tax breaks and save even a bit more, which is another big reason to pay your nanny taxes. These tax breaks are only available if you pay your caregiver legally.

Among these tax breaks, are there particular advantages or benefits for families using HomePay?
For the families, it saves them time and the stress of setting tax and payroll up in compliance with laws and regulations. We know families are busy and oftentimes have young children at home— that’s why they have a caregiver working for them in the first place. For families considering HomePay, we offer free services, including a free 20-minute consultation that provides insight into costs, tax breaks and making sure they fully understand the meaning behind being a household employer.

What are the potential consequences for not paying your nanny legally?
We get asked all the time, “Who will know if I don’t pay my nanny taxes?” Most people assume the only way they’d be caught is through an IRS audit, and while an audit would expose non-compliance, a more common way families get caught is when a former caregiver files for unemployment. She would identify the family as a former employer and when it becomes clear that no taxes have been paid towards unemployment, a flag is raised. If a family does get caught, there are penalties. At the highest end, penalties can hit $25,000, a year in prison and loss of any professional license, but we personally haven’t encountered a situation that extreme. We do, however, have clients who have come to us realizing they should’ve been doing this for the past five years.

Aside from the benefits HomePay provides families, what benefits does it provide the caregiver? HomePay opens the door for caregivers to have access to an array of benefits including:
• Social Security
• Medicare
• Ability to file for unemployment
• Ability to have a worker’s history
• Disability insurance
• Workers’ Compensation if injured while working on the job
People who work for traditional employers take these benefits for granted. But try getting a car loan without an employment history. Try supporting yourself between jobs. Caregivers provide a critical role in any family. Paying them legally and enabling them to have access to benefits is not just the law but it’s the right thing to do.

How do you generate further awareness of HomePay among families?
Since being acquired by, we’ve leveraged the company’s massive online marketplace to educate families on their responsibilities as household employers. What had been a business based on referrals and word of mouth has grown exponentially by reaching an audience of millions of members on a regular basis. Insuring that caregivers are treated professionally is of great importance to us and so we also work with advocacy groups such as the National Domestic Workers Alliance in support of domestic workers bill of rights.

Does HomePay notice any seasonal trends as we enter into the fall season?
There are definitely seasonal trends when it comes to household employees, especially nannies and sitters. Summertime is a big season for us because kids are out of school and families need child care help at home. As we head into fall, we see a shift during the back-to-school period, as families go from needing a full-time nanny to a part-time nanny, or start from scratch for younger kids with a new full-time nanny. It’s a transition time we’re happy to help with. HomePay is celebrating its 25th anniversary. How is that a testament to your success?
We’re enormously proud of the service we’ve provided for 25 years and the families and caregivers we’ve served. In 1992, the industry didn’t really exist and today HomePay has established itself as the nation’s leader in this highly specialized, nuanced segment of tax and labor law. Over the past 25 years, we have:
• Helped more than 50,000 families
• Helped more than 100,000 caregivers be paid legally, providing them critical protections
• Saved families an aggregated 12.5 million hours to do something more important, such as spending time with their children
• Processed more than $3 billion in household dollars and wages from family to caregiver
• Contributed $750 million in tax revenue on behalf of our clients We’ve made quite a difference in the lives of families and caregivers— and we’re never going to stop looking for ways to improve.

Published (and copyrighted) in Suburban Life Magazine, August, 2017.