Guest Blog Post from Chelsea at HomePay
As you may know, the Covid relief bill, The American Rescue Plan, is set to be signed into law this week and is loaded with provisions that will increase the professionalization of the industry. Here are some key takeaways:
- Most nannies will get a $1,400 relief check plus an additional $1,400 per dependent.
- Unemployment benefits from the state will get a $300 weekly boost from the federal government and be extended by another 6 months (through August 29, 2021).
- FSAs for dependent care will be increased from $5,000 to $10,500 for the ’21 tax year. This will yield about $4,000-$4,400 in savings for families with care expenses.
- For families that don’t have access to a FSA, they will see an increase in the expense limits for the Child or Dependent Care Tax Credit (CDCTC). If they have one child, it will increase from $3,000 to $8,000 and if they have two or more children, it will increase from $6,000 to $16,000. The credit percentage applied to these expenses will also increase. Although the credit percentage will gradually decrease based on the family’s household income, most families will see their savings from this tax break at least double – and in many cases, triple!
- Many nannies will benefit from an expansion of the Earned Income Tax Credit (EITC). This program helps working mothers by essentially reducing their tax burden. Depending on how much they earn and how many children they have, the EITC benefits can reduce the worker’s tax burden to zero – or even create a tax refund.
- The Families First Coronavirus Relief Act (FFCRA) provided subsidized paid sick leave or paid family leave for various reasons related to COVID-19. While employers are no longer required to provide this leave, the American Rescue Plan provides an additional 10 days of subsidized paid leave (up to $12,000) for qualifying COVID-related reasons effective 3/31/2021 through 10/1/2021.
We’re here to help agencies, families and nannies understand all these exciting changes and take advantage of them with legal pay.
Contribution By:
HomePay℠ by Breedlove, Tax and Payroll Experts
Household Employment Specialists Since 1992
Direct Phone 877-367-1969 | Fax 512-347-9331
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