There is a new payroll tax that I want to make you aware of. This tax will affect both nannies and parents.
Nannies – if you work in Washington state, you will be responsible for paying this new tax starting January 1, 2022… BUT you must take action by November 1, 2021.
Parents – while you are not responsible for paying this tax, you do need to collect and remit the tax to the Employment Security Department.
In this video, I interview Tom Breedlove – Senior Director of HomePay about the new Washington Cares Act. HomePay is the nation’s leading payroll company. They are amazing to work with and I recommend them to all of our members!
The Washington Cares Act payroll tax will provide employees with up to $36,500 in long term care benefits.
We cover what the Washington Cares Act is, what is does, how to navigate it, and how it affects employees (nannies) and employers (parents).
Parents – if you would like HomePay to handle paying your nanny and taking care of all of the forms, taxes, deadlines, etc. (including this new payroll tax), please click here.
Learn more about the Washington Cares Act by clicking here.
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A transcript of the video can be found below:
Hi everyone, Laura from Nanny Parent Connection here.
There is a new payroll tax that’s coming up and nannies, if you work in Washington state, you need to decide if you’re going to opt-out or opt-in. Which is doing nothing, It’s just a payroll tax that your employer needs to administrate by November 1st, which is coming up in less than a month.
Please join me as I speak with Tom Breedlove, the Senior Director of HomePay, and he’s going to walk us through and help navigate what the Washington Cares Act is, how to navigate it, what it means for employees and what it means for employers.
Laura: Hello everyone, Laura here from Nanny Parent Connection, and today I have Tom Breedlove, Senior Director of Home Pay, the nation’s leading payroll company. So Tom, if you could tell us a little bit about the Washington Cares Fund, give us a brief overview. We would love to hear about this new fund that’s being started up.
Tom: Yeah, great, thanks for having me, Laura. Yeah, the Cares Fund legislation is designed to make sure that everyone in Washington has access to long-term care benefits. Studies show that most people at some point in their life could use at least some level of assistance when it comes to things like transportation, preparing meals, so you might have an injury or a diagnosis that requires a little bit of help and this new law they might even you might even need something like a wheelchair ramp put in your house for things like that. So this new law is essentially provided by the state. It’s funded by payroll taxes and again it makes sure that everybody has access to those benefits if and when they need them.
Laura: I see, well that all makes sense. Sounds like it’s moving in the right direction, certainly. So how much is the payroll tax and who pays for this?
Tom: Yeah, it’s paid by the employee, so the nanny would pay the tax and it’s a 0.58% tax rate. So basically a little bit more than half of 1% is what the employee will owe. So for every $100 of wages, the employee would owe $0.58 to put it in perspective. In this case, the family doesn’t have to pay anything, but they do have to administer the tax, so they’re required to withhold it from the employee’s pay, and when the rest of their employer taxes are due, they just remit those monies to the state and everything is handled that way.
Laura: OK, perfect. And what are the benefits of this payroll tax?
Tom: Yes, so everyone who is part of this program would be entitled to up to $100 per day, up to $36,500 of long-term care benefits. Those numbers are being adjusted every year for inflation. Hopefully, when all of us need it, it’ll be even more valuable.
Laura: I see wonderful. What are the eligibility requirements, if any for this?
Tom: Yeah, the state does have a few requirements, You have to be 18 years of age or older, you have to be a current resident of Washington and the final thing is you need help with three different daily activities.
There’s a list of these activities like meal prep, dressing, bathing, hygiene, and things like that. And if you need help with those, at least three of those, then you would meet that criteria. So there’s an application process and everyone will go through if you feel like you need this assistance, you would apply with the state and they would approve it and then start issuing the funds.
Laura: I see, thanks for explaining that all right. And when does all of this go into effect Tom?
Tom: Yeah, the tax withholding piece will go into effect in January 1, 2022. Employers will start withholding the tax then. In January of 2025, employees can begin applying for the benefits. So there’s a three year lag there where they’re trying to build up the fund, and then at that point, if you need access to the benefits, you would be able to apply for it.
Laura: That makes sense. Tom, can you explain if nannies can opt-out of this?
Tom: Yes, it is possible to opt-out of this program. In order to do so, you need to either have a long-term care insurance policy or you need to purchase one before November 1st of this year. So, only about a month away if you go that route then there’s a process which you have to basically provide that policy information to the Employment Security Department (ESD). If they approve it, they will give the employee a letter, an exemption letter that says you’re approved and you don’t have to withhold this tax from your pay. You would just provide that to your employer and if you’re a family and an employee has that letter, then you just hold onto it in the event that anyone ever questions why you didn’t withhold the 0.58%. Then you would say, well because I have this exemption letter. That’s kind of the way that process works now. One thing I should point out Laura is that if any of your nannies opt-out they need to know that this is a permanent decision and it’s a pretty important one because if you declare yourself exempt and opt-out, you don’t have to pay that tax that we talked about but you also wouldn’t get the benefits that we talked about, and it’s permanent and irreversible.
From now through the rest of their life, they would not be able to get back into the program. But in theory, if they have a long-term care insurance policy, maybe they wouldn’t need it, so maybe that’s fine. I just want to make sure that people make a good decision there and one other point on that too is that when they have that exemption letter, that approval letter that I mentioned, they would provide that to every employer for rest of their career.
Laura: I understand, yeah, it’s kind of something that follows you, or rather it needs to follow you so you have to keep a hold of it because, for every single employer, you have to have that to reference and show proof up, I understand.
Tom: Yeah, that’s right.
Laura: OK, perfect. So the taxes are being paid by the employee unless they are opt-out by purchasing a private long-term-care insurance policy and applying for an exemption with the Employment Security Department. So how often do employers need to remit the tax to the state?
Tom: Those taxes would be remitted with the rest of the employment tax returns at the end of each calendar quarter. The good news is there’s not an extra form or any additional burden for families, the state of Washington is revising the employment tax form, and it will now document this tax, and they’ll be able to remit those dollars along with their tax return. There’s not a lot of extra work once that form gets revised, it’ll be the way that gets sent in every quarter.
Laura: OK perfect, that’s good news that they’re trying to make things easier for people approaching. Speaking of all of these employer requirements, is all of this handled by Home Pay?
Tom: Yes, this is all part of our services and it’s just one more thing that we deal with. We can handle all aspects of this new payroll tax.
Laura: Awesome, that’s one thing I love being a busy parent. Just that we can kind of know that partnering with you makes things just happen. We don’t have to worry about the extra steps, you guys handle it.
Tom: Yeah, who has time to think about this?
Laura: Yeah, it’s perfect. More handing off in a busy parent’s life, that’s a good thing. If anybody has questions about the Washington Cares Act, can they direct questions to you to Home Pay? Or how does that work?
Tom: Yeah, absolutely! Even if they’re not a Home Pay client, if their client of Nanny Parent Connection, we’re happy to provide answers to all these types of questions and all the other employment-related questions that come into play, we do that for free, there’s no charge for it. All they need to do is give us a buzz and don’t need to even set up an appointment. We have a team of experts who can walk through all the obligations, answer all the questions, even do budget calculations, for the employer taxes, and some of the tax breaks that employers get depending on their expenses. We can walk through all of that and make sure that your families are fully informed about everything, prior to them even deciding whether they want to use the Home Pay so feel free to do that. I can even give a number if you want me to just call it.
Laura: Yes, please!
Tom: Feel free to call, it’s (877) 367-1969, we’re here to help at any time, just give us a buzz!
Laura: Alright, excellent! For anybody interested in connecting with the Home Pay and we will provide a link below in the description. Tom, do you have a website you would like to share as well?
Tom: Yes, they can go to www.myhomepay.com.
Laura: OK, great will include that link in the description below as well.
Well, thank you so much. I appreciate you taking time out of your day. I know you’re a busy guy and I really appreciate you just helping us kind of navigate what feels again like a very complex thing. But in reality, it just seems like you need to make a decision and then get going with the taxes, and it’s pretty straightforward and simple for employers. They just need to administer it and nannies need to decide if they’re in or if they’re out and then have a plan if they do opt-out. So perfect! Well, that feels so much easier.
Tom: OK, well if there are any questions you can always call!
Laura: That’s great. I appreciate your time. Thank you so much. It’s been a pleasure speaking with you today.
Tom: Yeah, thanks for having me.
Laura: Alright, take care Tom bye-bye.
That was Tom Breedlove from HomePay and he was walking us through the new Washington Cares Act. This is a payroll tax that needs to be administered by employers. So if you employ a nanny, you need to only administer this payroll tax. It does come out of the nanny’s portion of their pay, it seems like a lot of moving parts but it turns out it’s pretty easy. You do need to know a little bit of information beforehand. Nannies, you need to decide if you’re in or if you’re out and if you are opting out, there are some additional steps you need to take to make sure you have a plan in place.
That’s it, thank you so much for joining us. Please make sure to check out the links in the description below if you’re interested in getting in touch with HomePay at all, I hope that you like this video, I hope it was helpful.
Please like our video, please ring the bell and subscribe so you’re alerted the next time another video like this comes out. Alright, thanks to everybody, goodbye!